A survey on the adoption of online credit operations by commercial Banks in Kenya
The proliferation and rapid advancements in technology based systems especially those related to the Internet have lead to fundamental changes in how organizations interact with customers. It was found that this trend is well established by commercial banks in Kenya, whereby banks have increasingly invested in technology to better secure their future in the electronic age. The aim of the study was to find out the extent of adoption of online credit operations by commercial banks in Kenya, the benefits to be realized, and the factors hindering adoption of online credit operations by commercial banks in Kenya. A survey was conducted on the adoption of online credit operations by commercial banks in Kenya. A structured questionnaire was used to collect primary data and 36 responses were received from credit, marketing and ICT staff from the banks which was used to analyze the data. Data from all sections was analyzed using statistical software Statistical Package for Social Sciences (SPSS). Frequencies, means, percentages and standard deviations were used in data analysis and data presented inform of tables. The results showed that, a majority of the respondents were from the large and medium size banks. Bank products/services that were seen to be widely accessible online being: electronic money transfer, cash deposit and withdrawals, inter account funds transfer, sms banking, request and receipt of bank statements. It was noted that online credit operations has not been adopted by commercial banks operating in Kenya. The challenges hindering it‟s adoption were identified to be: the high cost of acquiring computers and their maintenance, high cost of acquiring or having access to Internet, lack of knowledge about the current trends, lack of adequate security for over the Internet transactions and illiteracy among bank customers were the major factors identified to be hindering the adoption of online credit operations in Kenya. Unlike the findings in other developed countries, lack of top management support did not have a great impact on the adoption of online credit operations in Kenya. The empirical evidence also confirmed a number of benefits enjoyed by banks and customers as a result of adoption of online credit operations. The benefits included: Reduction in paper work; time saving; reduction in time required for loan application, approval, and disbursement of funds; and improved service delivery. However it was noted that adoption of online credit operations may not significantly lead to reduction in branch networks per bank and reduction in the number of credit staff per branch. The empirical findings suggest that online credit operations has not been widely adopted in Kenyan banking industry. Its adoption would yield such benefits as reduction in paper work, time saving and lead to improved customer service. Further the evidence also reinforced the argument that security concerns, high cost of acquiring and maintaining computers and inadequate availability/accessibility of Internet are some of the major factors hindering the adoption of online operations. Adoption of online credit operations by banks and their customers requires a lot of flexibility, a positive attitude towards change, and massive investment to enhance security for over the Internet transaction. Kenyan government should consider a further reduction in taxes on computers and there accessories. This would help to reduce the cost of acquiring computers, and their maintenance which is currently considered to be prohibitive. Although there has been some improvement in access to Internet due to its accessibility over the mobile phones, the government should consider providing computers, electricity and Internet connections to the most remote parts of the country to ensure equitable economic development.