Effect of Mobile Banking on Financial Performance of Commercial Banks in Eldoret Town, Kenya

Information technology has changed the traditional ways of doing business to a digital and electronic way that has led to globalization. The banking industry has been forced by the wave of electronic payment system in the business environment to change from its traditional ways such as: long queues as customers waited to be served, delay in the clearing house as representatives of different banks waited to settle their dues and manual work that resulted to errors. The main purpose of the study was to determine the effect of electronic banking on the financial performance of commercial banks in Kenya. The specific objectives were to determine the extend of internet, mobile, automated teller machine and debit/credit card banking adoption and its effect on financial performance. The study covered a period of five years that is from the year 2011 to the year 2015 and adopted descriptive research design. The data collected was analyzed by the use of both descriptive and inferential statistics procedures. Primary and secondary data was collected from the 34 commercial banks that responded leading to a respond rate of 79.04% out of the 43 commercial banks. The trade analysis showed that internet banking was recognized and accepted by the Kenyan commercial banks and the Kenyans as a way of transacting. Electronic banking was found to be positive and significantly related to the financial performance of the commercial banks in Kenya. This was attributed by an R Square of 0.688 for Return On Assets, 0.63 for Net Profit and 0.277 for Return On Equity indicating that the independent variables in the study were able to give information of up to 68.8%, 63% and 27.7% respectively while the remaining 31.2%, 27% and 72.3% could not be explained in the study but could be explained using other variables outside the study. All the independent variables were (internet banking, Mobile banking, Automated Teller Machine banking and Debit/Credit banking) found to be positively and significantly related to the Return On Assets while only mobile banking and internet banking were found to be positively and significantly related to Net Profit since their p Values were less 0.05. Automated Teller Machine banking showed a positive relation that was insignificant with the Return On Equity.The study recommends that, electronic banking should be employed by commercial banks through proper management policies since it has shown improved efficiency and financial performance. For further studies, areas of crime technology, quality of banking services, electronic fund transfer and performing loans should be looked at. This is an open-access article published and distributed under the terms and conditions of the Creative Commons Attribution 4.0 International License of United States unless otherwise stated. Access, citation and distribution of this article is allowed with full recognition of the authors and the source.

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Analyzing Effect of Alternative Banking Channels on Financial Performance of Burundi Commercial Banks: Evidence from Kenya Commercial Bank in Burundi

Asian Journal of Advanced Research and Reports ◽

10.9734/ajarr/2020/v10i430247 ◽

2020 ◽

pp. 1-11

Author(s):

Nkeshimana Carlos ◽

Martin Onsiro Ronald

Keyword(s):

Financial Performance ◽

Commercial Bank ◽

Commercial Banks ◽

Strong Relationship ◽

Target Population ◽

Internet Banking ◽

Sample Population ◽

Mobile Banking ◽

Significance Level ◽

Descriptive Survey

The study sought to assess the effect of channels of alternative banking on financial performance of Kenya Commercial Banks in Burundi. The specific objectives were: to examine the effect of mobile banking on financial performance of Kenya Commercial Bank, Burundi; to assess the effect of internet banking on financial performance of Kenya Commercial Bank, Burundi; to examine the effect of auto teller machines on financial performance of Kenya Commercial Bank, Burundi; and to assess the effect of agency banking on financial performance of Kenya Commercial Bank, Burundi. The study employed descriptive survey research design as well as correlation research designs. Based on information obtained from KCB, the target population for the study was 37 employees and 114 customers. The researcher used Slovin’s formula to define the sample population n = 60 (14 employees and 46 customers). A questionnaire was used for data collection. The data was qualitatively and quantitatively analyzed. The results of the study showed that there was a strong relationship between the different banking distribution channels and the financial performance of KCB Bank. It also found that 14.1% of the total variance in financial performance of KCB Bank could be attributed to alternative banking channels. The remaining 85.9% of the variance in financial performance could be attributed to other determinants of financial performance that were not the focus of this study. ANOVA statistics revealed that the regression model was ideal since it had a significance level of 0.0%. The study also found that mobile banking, Automated Teller Machine, agencies and Internet banking affected the performance of commercial banks in a positive and statistically significant way. The study recommends that Burundian commercial bank sought to invest heavily in alternative banking as this will lead to an improvement in banks' financial performance. The study also recommended that KCB should examine the competitive environment and determine the means to achieve the goal of interoperability, and continue to make electronic banking products available, offering various types of bank cards adapted to the needs of each client.

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Mobile Banking Services with Financial Performance on Commercial Banks in Kenya

International Journal of Current Aspects ◽

10.35942/ijcab.v3ivi.84 ◽

2019 ◽

Vol 3 (VI) ◽

pp. 176-192

Author(s):

Maurine Mugane ◽

Reuben Njuguna

Keyword(s):

Financial Performance ◽

Commercial Banks ◽

Short Message Service ◽

Target Population ◽

Short Message ◽

Strong Positive Correlation ◽

Mobile Banking ◽

Banking Services ◽

Positive Correlation ◽

Message Service

The competition dimensions have changed following the adopting of various internet banking services that came about as a result of technological innovations such as the introduction of Automated Teller Machines (ATMs), phone banking Personal computer banking which were some of the first innovations of electronic finance. The main objective of this study was to establish the impact of mobile banking services on the financial performance of commercial banks in Kenya. The specific objectives guiding this study included to assess the influence of short message service (SMS) banking on the financial performance of commercial banks in Kenya, to establish the effect of person to person payments on the financial performance of commercial banks in Kenya, to determine the effect of bill payments on the financial performance of commercial banks in Kenya and to find out the effect of airtime top up service on the financial performance of commercial banks in Kenya. The research design that the study adopted was a descriptive research design employing quantitative research strategies. In this study the target population under investigation was all the 40 commercial banks in Kenya. Since in the current study the target population was 80 participants from all the 40 commercial banks in Kenya a census inquiry method was the best method used. Primary data for this study was collected through the use of a questionnaire that was given senior managers from all the departments of these organizations. Both quantitative and qualitative data was generated in this study. Qualitative data was analysed using content analysis whereby content of responses was looked at and responses were grouped together in relation to common patterns or themes for coherent categorization. Descriptive statistics included measures of central tendency and dispersion thus standard deviation and mean and use of absolute and relative percentage frequencies. Presentation of quantitative data was in form of graphs and tables and explanation given in prose. The study findings show that short message service had an above average positive correlation with financial performance of commercial banks and was statistically significant. Person to person had an average correlation with financial performance of commercial banks and was statistically significant. Bill payments had a strong positive correlation with financial performance of commercial banks and was statistically significant. Airtime top up service had an strong positive correlation with financial performance of commercial banks and was statistically significant. The study concludes that short message service banking has become and important part of banking, more and more people prefer to receive banking alerts through short message service which has not only improved service delivery but has had a positive impact on financial performance. Commercial banks have experiences large revenues from different activities with the banking system core among them the bill payments activities. The study recommends that it is important for commercial banks to focus more on short message service banking to lower operational costs thereby improving financial performance. Commercial banks need to consider using person to person payments to improve on their performance, they need to enhance their bill payments to get more clients paying bills using their systems so as to improve on their financial performance and that it is important for commercial banks to put more effort on airtime top up service so as to improve on their financial performance.

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Innovative Banking Practices and Financial Performance of Commercial Banks in Kenya

International Journal of Current Aspects in Finance, Banking and Accounting ◽

10.35942/ijcfa.v3i1.180 ◽

2021 ◽

Vol 3 (1) ◽

pp. 41-53

Author(s):

Hussein Hillowle Mohamud ◽

Fredrick Warui

Keyword(s):

Financial Performance ◽

Commercial Banks ◽

Banking Industry ◽

Operating Cost ◽

Investment Banks ◽

Central Position ◽

Mobile Banking ◽

Face To Face ◽

Product Service ◽

Bank Tellers

Commercial banks serve as key financial intermediaries in facilitation of the flow of money in the banking industry. Commercial banks offer credit to investment banks in order to offer investment opportunities for risky investments especially for financial securities using depositors’ money. Globally, banks are affected by broad difficulties in the operating environment. The banking industry has embraced innovation to sustain competitiveness. Financial innovations used by commercial banks revolve around the latest product, service and its conveyance to consumers. Consequently, this information influenced the research with its aim as; investigating innovative banking applications and monetary capability of banks. Particular goals included examining how; real time gross settlements (RTGS), electronic fund transfers (EFT), pay bill innovation in mobile banking and the extent of agency banking influence monetary potential of banks. Research anchored on the Schumpeter theory of innovations, the agency and bank-led theories. It was explanatory in nature and applied a census approach to gather information. The targeted group included commercial banks registered under the Central Bank totalling to 42 tiers 1. Raw and derived data was equally utilized including, financial statements and face to face interviews with top level managers. Collected information was examined by SPSS. Given conclusions were dispensed descriptively, and by inferring to statistical presentations. The resulting conclusion was that; when RTGS, agency banking, EFT, and mobile banking are solely brought up/down by a single unit, financial performance increased/ decreased by 0.163, 0.27, 0.197, and 0.318 units. At a constant however, financial performance remained at 0.236 out of 5 units. In conclusion, commercial in banks have significantly relied on innovative banking practices to shift their financial performance to new heights. The study has particularly placed both mobile and agency banking at a more central position in driving financial performance to the desired level than other factors including the RTGS and EFT. As part of the recommendations, managements of commercial banks should consider scaling up their adoption of RTGS, agency banking, EFT, and mobile banking as ways of reducing the operating cost of their respective banks reducing banking hall congestions since most of the frequently sought banking services can be achieved without one on one meeting with the bank tellers. Management should also consider adopting more innovative banking practices besides those this research investigated.

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The Effect of Financial Restructuring on the Financial Performance of Commercial Banks in Vietnam

Journal of Business Management & Economics ◽

10.15520/jbme.2016.vol4.iss3.184.pp32-37 ◽

2016 ◽

Vol 4 (3) ◽

Keyword(s):

Financial Performance ◽

Commercial Banks ◽

Financial Restructuring

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Financial Innovations and Performance of Commercial Banks in Kenya

International Journal of Current Aspects in Finance, Banking and Accounting ◽

10.35942/ijcfa.v2i2.128 ◽

2020 ◽

Vol 2 (2) ◽

pp. 21-33

Author(s):

Naomi Wanja Ireri ◽

Gladys Kimutai

Keyword(s):

Rural Areas ◽

Commercial Banks ◽

Internet Banking ◽

Ease Of Use ◽

Primary Data ◽

The Internet ◽

Mobile Banking ◽

Good Opportunity ◽

Financial Innovations ◽

Automated Teller Machine

Commercial banks in Kenya have embraced alternative banking channels which represent a shift in delivery of banking and financial services since the alternative banking have become synonymous with commercial banks in Kenya. While banks have succeeded in leveraging available technology and provide alternative avenues to customers for banking services, the challenge it faces today is optimizing the usage of these channels so as to improve on their performance. The general objective of this study was to investigate the effects of financial innovations on the performance of commercial banks in Kenya. The specific objectives of the study were to examine the influence of internet banking, mobile banking, agency banking and ATM banking on the performance of commercial banks in Kenya. The study was guided by agency theory, balanced score card and diffusion of innovation theory. This study employed a descriptive research design. The study targeted44 commercial banks in Kenya as at 2017. The 16 banks which embrace all the four financial innovations from 2013 to 2017were selected using purposive sampling method. The sample size was 80 respondents who comprised of 5 senior management employees in each of the selected banks.This study used questionnaire to collect primary data from the respondents. Content analysis technique was used to analyze qualitative data collected from open ended questions in and reported in narrative form. Descriptive statistics such as mean and standard deviation were used to analyse the quantitative data. Multiple regression analysis was used to show the relationship between independent variables against dependent variable. The study revealed that internet banking, mobile banking, agency banking and ATM banking had a positive and significant effect on the performance of commercial banks. Thisstudy concludes that the banking industry has benefited tremendously from the development of the Internet. The Internet fundamentally changed the way in which banking networks are designed to meet the client demands and expectations. Mobile banking provides a good opportunity to commercial banks in Kenya to reach many mobile phone subscribers in Kenya who had remained unbanked and unreached due to limited access to bank branch networks in the country. The access to the large masses through mobile banking of the population gives banks the opportunity to grow by reaching the unbanked population. Agency banking has led to accessibility of financial service to many customer in remote areas and hence an increase in effectiveness and efficiency in service delivery. Customers are satisfied with the automated teller machine services because of ease of use, transaction cost and service security but not satisfy with automated teller machine dispense of cash. The study recommends that the public and businesses must be encouraged to use Internet banking in their daily activities, including deposits, payments and money transfers. Commercial banks in Kenya should ensure convenience and security of mobile banking through written guidelines on convenience and security of mobile banking. Commercial banks in Kenya should increase the number of agents in estates and in the rural areas. This can be done by reducing the requirements of becoming a bank agent. The banks should employ customized software that records relevant information on automated teller machine cards so that banks can establish whether unauthorized transaction has taken place or not.

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