Strategies Adopted By KCB Ltd To Attract Kenyan Investors In Diaspora
Diasporas have played significant roles in the development of many nations. Remittances are the largest source of net foreign inflows after foreign direct investment (FDI). Kenyan banks have been on the forefront of attracting the diaspora to channel money into the country through them. This research sought to determine various strategies employed by KCB Limited in an effort to attract diaspora to use KCB as a channel of sending and investing funds by incorporating the OLI theory. It targeted the senior management at the bank who are involved in decision making and thus would be best suited to give the information necessary for this study. The study used primary data that was collected using interview guide. It revealed that, the bank possesses ownership advantages which include its capital strength, economies of large size, technology, experience in foreign operations and product diversification. Broad access to financing from large firms such as the IFC also gives an advantage to the subsidiaries as compared to their local competitors by virtue of the parent company‘s capital base. Through its continuous internationalization process the bank has the advantage of international diversification of assets and risks. The ownership and internalization factors give KCB a competitive edge in the foreign markets because its subsidiaries have privileged access to capital from its parent company which is the most capitalized in the country. This capital can be obtained at preferential rates as compared to borrowing from another entity in the external market. The technology used by the bank also provides real time banking which is lacking in other competitor banks thus enabling it to provide efficient services to its customers wherever they are in the five countries in which KCB operates. Internalization of processes enables the bank to move its capital from one country where it is in excess to another subsidiary where it is in deficit. The technological platform also contributes to internalization because the system supports transactions across the four countries; therefore the bank does not need to purchase a different system when going into a new country. It would also be risky to contract such a system to an agent, a slight error would greatly affect the bank‘s operations across the region therefore this is entrusted only to its employees who are bound by company policy. The Location factors did not qualify for the case of KCB because apart from South Sudan, none of the other countries fit in Dunning‘s definition of location advantages which states that ―location-specific advantages are those which are available, on the same terms, to all firms whatever their size and nationality, but which are specific in origin to particular locations and have to be used in those locations‖. Therefore, the OLI theory partly explains KCB‘s strategy in attracting Kenyans in diaspora process but not fully, because there are other strategies other than the Ownership, Location and Internalization but it provides a sound basis on the major strategies that KCB has used to attract Kenyan investors in diaspora. Other strategies adopted by KCB Limited to attract Kenyan investors in diaspora include The Banks dedicated relationship managers in each Region and a 24-hour Contact Centre to facilitate customer enquiries regardless of their time zones. KCB has also partnered with Brand Kenya Board as a major sponsor to establish the inaugural Kenya House at the Olympics and seized the London Olympics to market the service where Over 20,000 visitors visited the Kenya House in London and later in the USA which made it easier to market the Diaspora Banking to most of the Eastern Africans present.