The effect of bancassurance on the financial performance of commercial banks in Kenya
Financial Institutions for a long time have been grappling with the decrease in their interest margins as a result of the rise in competition, changes in technology and the deregulation of the Financial Sector as well as globalization. With the rise of financial innovation, Bancassurance is the way to go. Anja et al., (2010), describes Bancassurance as the selling of insurance through the bank distribution channel. Bancassurance provides banks with the opportunity to acquire additional revenue streams while promoting customer retention. Few studies have been done relating to Bancassurance in its entirety. The objective of the study was to determine the effect of Bancassurance on the financial performance of commercial banks in Kenya. Secondary data was collected from Central Bank of Kenya and Bank Financial reports and multiple regression and correlation analysis were used in the data analysis. The study revealed that there was strong positive relationship between the financial performance of commercial banks and bancassurance, annual interest on loan advances but a negative relationship with annual inflation rate. Firstly, the study revealed that there was strong positive relationship between bancassurance and financial performance of commercial banks in Kenya. The study also found that there was a positive relationship between annual interest on loan advances and financial performance of commercial banks in Kenya. In contrast, however, the study revealed there was a negative relationship between annual inflation rate and financial performance of commercial banks in Kenya. There is need for a committed top management to show full support in facilitating the adoption and implementation of bancassurance as there is significant relationship between bancassurance and financial performance of commercial banks. The study recommends that the Banking Act should be reviewed with a view of formulating policies so as to enhance clarity and recognition of this insurance sales channel through the banks.