The Effect Of Electronic Banking On Financial Performance Of Commercial Banks In Kenya
Banking industry has been in a process of significant transformation. The force behind this transformation of the banking industry is innovation in information technologies. It is against this background that the study sought to investigate the impact of electronic banking on financial performance of commercial banks. The main objective of the study was to establish the effect of electronic banking on financial performance of commercial banks in Kenya. The specific objectives were to determine the extent of e-banking adoption and the effect of this adoption on financial performance of commercial banks in Kenya. The study adopted a descriptive research design. Primary data was collected through data collection form that was developed and sent to the respondents of commercial banks. The primary data was also augmented with secondary materials collected from published financial statements of the respective commercial banks and central bank of Kenya supervision reports. Appropriate frequency tables and charts were used, a multiple regression analysis was also used to explain the relationship between the variables and present the findings. The study revealed that fees and commission from debit cards, credit cards and mobile banking has a significant effect on returns on asset whereas fees and commission from internet banking as well as the amount of money that commercial banks invest in electronic banking to install, train staff and maintain the platforms has no or minimal effect on return on assets. The adoption of e-banking banking has enhanced performance of commercial banks due to increased efficiency, effectiveness and productivity. The study recommends that commercial banks should expand their electronic services in a planned and well-articulated strategy for the long run, in order to achieve customer satisfaction and increase in banks profitability.