Effects of information communication technology adoption on financial performance of financial institutions in Kenya
Highly dynamic operational environment among financial institutions has called on them to continuously think of ways of improving the efficiency and effectiveness in their operations for optimal financial performance results. Adoption of ICT has been used as one of the strategies to help financial institutions improve performance. This study sought to determine the effects of information communication technology adoption on financial performance of financial institutions in Kenya. This study adopted a descriptive research design and the population of study consisted of all the 258 financial institutions in Kenya as at 2015. Simple random sampling technique was applied to select a sample size of 78 financial institutions. The study applied primary data using questionnaires and secondary data collected from the respective institution’ financial statements and summaries at the Central bank of Kenya. Editing, coding, classifying and tabulation are the processing steps that was used to process data for better and efficient analysis. The study also revealed that adoption of internet banking had improved cost efficiency in the institutions, improved customer relationship management in the bank, improved customer convenience and reduced the institutions operating expenses. Adoption of ATM technology had improved cost efficiency in the institutions, improved fraud risk management in the bank and improved new customer enrolment in the institutions. The study concludes that majority of the financial institutions in Kenya have invested their resources in new products and technology innovations such as mobile banking, electronic funds transfer, internet banking and automated teller machines. These aspects of ICT have helped the institutions in carrying out business activities more effectively and efficiently and through information technology has emerged as a strategic resource for achieving higher efficiency, control of operations and reduction of cost by replacing paper based and labour intensive methods with automated processes thus leading to higher productivity and profitability. The study recommends that financial institutions should integrate the use of internet for exploring and finding new customers, enhancing speedy of communication, developing new products, collecting and managing information, generating a wide range of product ideas from a wider range of sources, access documents and share technical information.
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