The effect of mobile banking on financial performance of commercial banks in Kenya
Mobile banking is a service provided by financial institutions in cooperation with mobile phone operators. It allows customers with busy lives to conveniently do their banking using their phones anytime. It is about getting banking services to the unbanked, those who do not have bank access or bank accounts, and those who are at the bottom of the economic pyramid, often living in remote areas. The study sought to determine the effect of mobile banking on financial performance of commercial banks in Kenya. Cross sectional descriptive survey was employed in this case. This informed who, how and what about the mobile banking in commercial banks in Kenya and as a one-time event. The study adopted a census method where all the commercial banks practicing mobile banking in Kenya were studied. The study made use of secondary data from the Audited Financial statements of the Banks, those deposited at the Nairobi Securities Exchange and financial performance data from CBK annual banking survey reports. The data collected was cleaned, coded and systematically organized in a manner that facilitates analysis using the Statistical Package for Social Sciences (SPSS). Quantitative analysis was analyzed through descriptive statistics such as measure of central tendency that generated relevant percentages, frequency counts, mode, and median and mean where possible. To test for the strength of the model and the effects of mobile banking on the financial performance of commercial banks in Kenya, the study conducted an Analysis of Variance (ANOVA). From the regression model, the study found out that there were mobile banking variables influencing the financial performance of commercial banks in Kenya, which are annual amount of money moved through mobile banking, number of users of mobile banking, capital adequacy, asset quality, bank liquidity and management efficiency. They influenced it positively. The study found out that the intercept was 1.076 for all years. The six independent variables that were studied (annual amount of money moved through mobile banking, number of users of mobile banking, capital adequacy, asset quality, bank liquidity and management efficiency) explain a substantial 75.1% of financial performance of commercial banks in Kenya as represented by adjusted R2 (0.751). The study therefore concludes that mobile banking positively and significantly affects the financial performance of commercial banks in Kenya. The study recommends that policy makers consider mobile banking in their formulation of policies because of the technological developments and the expected switch from physical branch networks to technologically supported banking services.The study further recommends that commercial banks keep adopting and using mobile banking in their operations because the number of people with access to a mobile hand set is increasing every day.