Strategic responses adopted by Commercial Banks to enhance market penetration of the unbanked population in Kenya
Okello, Elvis Gilberts O
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The business environment is constantly changing and has shifted considerably over the past several years, presenting both; Threats and Opportunities to the banking sector in Kenya. In light of this dynamic landscape, commercial banks must manage rapid environmental changes and make difficult decisions in order to survive, navigate and compete effectively in the Kenyan banking industry. Organizations need to create and implement an effective strategy in order to excel in today's marketplace. While setting and implementing strategy is never easy, organizations that make the investment in time, effort, and thinking are better equipped to excel in the marketplace and outperform their competitors. On the other hand, the quest for financial inclusion is generating a lot of interest, not just in Kenya but throughout developing economies. Financial exclusion is thus a key policy concern, because the options for operating a household budget, or an enterprise, without mainstream financial services can often be expensive. This study sought to determine what strategic responses commercial banks are adopting in order to reach the unbanked population in Kenya and the influence of these strategic responses on enhancing market penetration of the unbanked population in the country. The descriptive research design was used for the purpose of this study, which allows the researcher to describe the phenomena under study. The population of this study was drawn from the Heads of strategy or their equivalent in 43 commercial banks registered and licensed under the Banking Act of Kenya as at June 2014. Primary and Secondary data were used for the purpose of this study. Primary data sources were through selfadministered drop and pick questionnaires for quantitative and qualitative data. Secondary data sources, Articles, books, Newspapers, the internet, journals and magazines were also used where the banks had granted interviews on their competitive strategies. The data collected was edited for completeness and accuracy, coded and entered in SPSS for analysis. Descriptive statistics were used to understand the characteristics and relationship between the established strategic responses and market penetration of the unbanked population in Kenya. Statistical tests such as independent sample t-test and ANOVA were used to analyse the differences in the data. Correlation and simple regression models were also used to understand the relationship between the dependent and the independent variables. The study concluded that Commercial banks employed strategic responses like, Market Segmentation, Mobile Banking, Agency Banking and Microfinance to reach the unbanked population in the country. This is testament to the fact that Commercial banks were indeed, embracing technological advances to get around cost barriers and help in reaching customers where they are located - overcoming infrastructural deficiencies and costs involved in physically reaching out to clients. Organizational strategy is one of the broadest and most complex concepts used in studying organizations. Many, if not most, organizations simultaneously pursue a combination of two or more strategies, but a combination strategy can be exceptionally risky if carried too far. No organization can afford to pursue all the strategies that might benefit the organization. Difficult decisions must be made and priorities established. In short, organizations just like individuals have limited resources.