Product Diversification Strategies and Performance of Commercial Banks in Kenya
The Kenyan banking industry has been experiencing cut throat competition which has risen to the point where even international banks have been forced to change their strategies in order to maintain and enlarge their market shares (Nyatich, 2009). In the last 5 years the market has experienced a shift in the market leadership where locally instituted commercial banks have taken over the leadership from the multinational banks. This has necessitated a research agenda into the forces behind the dislodgement and thus one of the strategies that has taken a huge focus is diversification and more specifically product diversification. In retrospect therefore, this research intended to make its contribution by taking a look at the various product diversification strategies that commercial banks are adopting in an endeavor to be at tandem with changing customer lifestyles, market trends, technological advancements, the effects of globalization as well as the economic and legal regulatory framework. Furthermore the study seeks to assess the relationship of the strategies to the performance of the commercial banks. Data was obtained from 38 commercial banks in Kenya, targeting medium/senior management staff especially marketing managers, product managers, sales managers, branch managers and operations managers across the country. The data was analyzed using descriptive statistics and mainly there was almost a unanimous view that product diversification has been overly adopted by commercial banks in an endeavor to ensure that banks remain relevant and continue to maximize profits in the face of the stiff competition both within the banking industry and even the entire financial industry.