Financial Innovations and Performance of Commercial Banks in Kenya

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.

scholarly journals Electronic Banking and Financial Performance of Commercial Banks in Kenya

2019 ◽  
Vol 3 (II) ◽  
pp. 293-304
Author(s):  
Maria Mueni Mutisya ◽  
Gerald Atheru
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Internet Banking ◽  
Business Environment ◽  
Mobile Banking ◽  
Electronic Banking ◽  
Return On Assets ◽  
Independent Variables ◽  
Net Profit ◽  
Automated Teller Machine

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.

scholarly journals Determinants of Internet Banking Adoption among Customers of Commercial Banks: An Empirical Study in the Jordanian Banking Sector

2016 ◽  
Vol 11 (3) ◽  
pp. 95 ◽  
Author(s):  
Hussain Ahmad Alwan ◽  
Abedlhalim Issa Al-Zubi
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Internet Banking ◽  
Ease Of Use ◽  
Computer Applications ◽  
Primary Data ◽  
Innovative Technology ◽  
Future Research ◽  
Perceived Ease Of Use ◽  
Customer Trust

<p>The study aimed at investigating the adoption of Internet banking by customers of Jordanian commercial banks, the barriers restraining its growth, and the solutions to some of the main hindrances that face this innovative technology. A sample of 476 customers having accounts in thirteen local commercial banks and using Internet banking was randomly selected. The self-administered questionnaire relying on a 5-point scale was used to solicit the primary data. The factor analysis-varimax rotation was used to determine the dimensions of the study items whereas the simple regression was employed to determine the relative influence of perceived privacy and security, perceived ease of use, service quality, customer trust, and customer feedback on Internet banking adoption. All the independent variables have significant impacts on Internet banking adoption whilst the best predictor of the adoption is accounted for the website quality followed by customer trust.  However, the adoption rate is low and is tracked mainly by customers of high education levels and high ability in using computer applications and internet experiences. Also, the study provides some recommendations and future research to resolve the obstacles facing Internet banking adoption by customers of commercial banks in Jordan.</p>

scholarly journals Financial Innovations and Levels of Risks in Commercial Banks in Kenya

2019 ◽  
Vol 3 (III) ◽  
pp. 111-121
Author(s):  
Hassan Maalim Abdullahi ◽  
Ambrose O Jagongo
Keyword(s):  
Commercial Banks ◽  
Reliability And Validity ◽  
Secondary Data ◽  
Target Population ◽  
Internet Banking ◽  
Primary Data ◽  
Financial Risks ◽  
Inferential Statistics ◽  
Financial Innovations ◽  
The Relationship

The commercial banks need to identify the sources of the several financial risks which emanates from financial innovations, as they may affect the banks’ stability. This study sought to determine the influence of financial innovations on level of risks in commercial banks in Kenya. The specific objectives were to determine the relationship between internet banking and financial risks in commercial banks in Kenya; to explore the relationship between mobile banking and financial risks in commercial banks in Kenya; to establish the relationship between agency banking and financial risks in commercial banks in Kenya; and to determine the relationship between electronic cards and financial risks in commercial banks in Kenya. The study adopted a descriptive research design. The target population was all the 42 commercial banks registered with CBK as at December 31st 2016. The unit of observation will be the risk management managers. This was a census study. The study collected both primary data and secondary data. Primary datawas collected from the respondents through a uestionnaire while secondary data was collected from the financial statements. Prior to the actual data collection, the questionnaire was tested for reliability and validity. The collected data was analyzed through descriptive statistics and inferential statistics through aid of SPSS software Version 21. The inferential statistics entailed use of a multivariate regression analysis to establish the relationship between the variables and test hypothesis. The analyzed data was presented using of tables, charts and graphs. 

scholarly journals Nexus Between Financial Innovation and Financial Intermediation in Nigeria’s Banking Sector

2021 ◽  
Vol 4 (3) ◽  
pp. 162-179
Author(s):  
Ejinkonye R.C. ◽  
Okonkwo I.V.
Keyword(s):  
Significant Relationship ◽  
Commercial Banks ◽  
Financial Intermediation ◽  
Financial Innovation ◽  
Internet Banking ◽  
Mobile Banking ◽  
Point Of Sale ◽  
Financial Innovations ◽  
Start Ups ◽  
The Relationship

This study evaluated the relationship between financial innovation and financial intermediation in Nigeria. It seems that banks in Nigeria may have a problem of deposit-loan mismatch and losing customers to start-ups given increasing cost of deposits attributable to disruptive practice arising from financial innovations. The specific objectives of this study were to examine the relationship between financial innovation (value of the automated teller machine, internet banking, mobile banking, point of sale transactions) and financial intermediation (commercial banks deposit mobilization) in Nigeria for the period 2009–2018. This study was anchored on the financial innovation theory of Joseph Schumpeter, which states that technology creates opportunities for new profits and super profits as a result of increased investment by banks or financial institutions on products of innovation. The ordinary least square was used to estimate the parameters. The data used were extracted from the Central Bank of Nigeria statistical bulletin. The results showed that there is a positive and significant relationship between financial innovation (value of Automated Teller Machine) and financial intermediation (commercial banks deposit mobilization) in Nigeria; there is a positive but no significant relationship between financial innovation (internet banking) and financial intermediation (commercial banks deposit mobilization) in Nigeria; there is a positive but no significant relationship between financial innovation (mobile banking) and financial intermediation (commercial banks deposit mobilization) in Nigeria; and there is no positive and significant relationship between financial innovation (point of sale transactions) and financial intermediation (commercial banks deposit mobilization) in Nigeria. The f-test result showed that financial innovations proxies jointly related significantly to commercial banks’ deposits. The work concludes that financial innovations contributed to commercial banks’ deposits in Nigeria. The researchers recommended among others that banks should improve on the security of transactions done on their platforms, continue to improve and partner with start-ups in technological infrastructure, improve on power and network stability, deploy more innovative products, and improve on the efficiency of bank staff by regular training.

scholarly journals Electronic Banking and Customer Satisfaction in Imo State (A Study of Selected Commercial Banks in Imo State)

2020 ◽  
Vol 5 (6) ◽  
Author(s):  
Chimaobi Ijeoma ◽  
Jane Chinyere Akujor ◽  
Jacintha Chikamnele Mbah
Keyword(s):  
Customer Satisfaction ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Positive Relationship ◽  
Primary Data ◽  
Mobile Banking ◽  
Electronic Banking ◽  
Imo State ◽  
Automated Teller Machine ◽  
The Impact

This study was carried out to examine the impact of electronic banking on customer satisfaction in commercial banks in Imo State. The aim is to determine the relationship between electronic banking and customer satisfaction in some commercial banks in Imo State. The study used primary data; the instrument used in gathering the primary data was questionnaire. The statistical tool of analysis is the Pearson Product Moment Correlation Techniques. The result revealed that there is positive relationship between electronic banking and customer satisfaction in United Bank for Africa Plc, Access Bank Ltd and Keystone Bank Ltd. It also revealed that there is positive relationship between Automated Teller Machine and Mobile Banking and customer satisfaction in United Bank for Africa Plc, Access Bank Ltd and Keystone Bank Ltd. More so, the study shows that there is a negative relationship between point of sale and customer satisfaction in the three (3) banks. This implies that increase in charge levied on those electronic banking systems will have a corresponding decrease in customer satisfaction and vice-versa. The study therefore recommends the following; that banks should improve continuously in the advance of Automated Teller Machine for speedy transaction when using by customers; financial institutions (banks) and non-financial institutions should endeavor to make available POS machine at a minimal cost to some small business outlets in order to help in the achievement of cashless economy; the banks should ensure that there is creation of more internet security in internet and mobile banking so as to avoid loss of cash by customers as a result of fraudulent activities and finally, continuous advancement and reengineering information communication technology should play a vital role in the overall synergy of financial institution operations (banking). It becomes more important for bank leadership to deepen investment in ICT products to increase speedy, user friendly and perfect services. These will make Nigerian banks to stand firm in terms of efficiency, profitability, reliability, and competitiveness among its global competitors and to withstand challenges and changes that may occur in ICT controlled globalized economy.

scholarly journals Electronic Payment Systems Implementation and the Performance of Commercial Banks in Nigeria

2019 ◽  
Vol 4 (5) ◽  
Author(s):  
Bingilar Paymaster Frank ◽  
Bariweni Binaebi
Keyword(s):  
Rural Areas ◽  
Commercial Banks ◽  
Positive Relationship ◽  
Internet Banking ◽  
Least Square ◽  
Mobile Banking ◽  
Electronic Payment ◽  
Payment Systems ◽  
Mixed Effect ◽  
The Government

This research paper investigated the effect of electronic payment systems on the performance of commercial banks in Nigeria. For the purpose of the study, data was collected from secondary sources specifically from the CBN statistical bulletin and comprised of data on the assets base of commercial banks and internet banking (ATM, POS, Internet banking and Mobile banking) for the period of 2009 to 2019. The collected data was analyzed using ordinary least square (OLS) regression technique. Findings of the research showed that there is a statistically significant positive relationship between ATM transactions and the assets base of commercial banks in Nigeria. Internet (online) banking transactions had a positive relationship with the asset base of commercial banks. There is a positive and statistically significant relationship between mobile banking transactions and the assets base of commercial banks. However, Point of Sales (POS) transactions had a negative statistical relationship with the asset base of banks. From the findings of the study, It is concluded that implementation of electronic payment system in banks have had mixed effect on the performance of banks. Thus, while ATM, internet banking and mobile banking leads to improvements in the performance of banks, same cannot be said for point of sales machines which has a negative effect on bank performance. Based on the above, it is recommended that commercial banks increase investments in the implementation of electronic payment systems. Finally, it is recommended that the government improve on internet infrastructure in order to capture the rural areas in order to promote financial inclusion through electronic banking in the country.

scholarly journals Antecedents of E-Banking Services by Customers for the Selected Commercial Banks in Sylhet, Bangladesh

2016 ◽  
Vol 9 (1) ◽  
pp. 47
Author(s):  
Mohammad Zahed Hossain
Keyword(s):  
Mobile Apps ◽  
Age Groups ◽  
Cost Effective ◽  
Internet Banking ◽  
Demographic Variables ◽  
Online Banking ◽  
Primary Data ◽  
Mobile Banking ◽  
Chi Square ◽  
Banking Services

<p>This study is conducted to identify customers view regarding cost effectiveness, time savings and security of different types of e-banking products like online banking, ATM banking, internet banking, mobile banking and telephone banking. E-banking is the alternative delivery channels that banks adopted for providing efficient banking services through the help of internet, computers, mobile phone etc. Banks’ customers were considered as population and primary data were collected through questionnaire. Descriptive statistics and Chi-square test were used for analyzing the data. The results indicated that customers prefer ATM banking services most, next to follow mobile banking and online banking. The customers believed that all types of e-banking products save time and except telephone banking others types of e-banking products were secured. Online banking and ATM banking services were not considered as cost effective. Analysis indicated no relationship between online banking and different demographic variables. ATM banking services was highly influenced by most of the demographic variables whereas internet banking, mobile banking and telephone banking influenced by few demographic variables i.e. age groups, education level, and monthly income. The results help banks to develop varieties of e-banking products and formulate strategies by considering the demographic characteristics of the customers. Customers expect more users friendly e-banking products along with diversify features and suggested to develop latest e-banking products like mobile apps based banking for ensuring long term customers relationship, attracting potential customers and keeping existing customers that may ensure consistent growth and profit as well.</p>

scholarly journals Effect of Bank Innovations on Profitability and Return on Assets (ROA) of Commercial Banks in Lebanon

2017 ◽  
Vol 9 (4) ◽  
pp. 35 ◽  
Author(s):  
Hiyam Sujud ◽  
Boutheina Hashem
Keyword(s):  
Social Sciences ◽  
Commercial Banks ◽  
Positive Impact ◽  
Credit Cards ◽  
Internet Banking ◽  
Mobile Banking ◽  
Significance Tests ◽  
Return On Assets ◽  
Point Of Sale ◽  
The Impact

The purpose of this research is to study bank innovations in the field of mobile banking, debit and credit cards, automated machines (ATM), internet banking, point of sale terminals (PST) and electronic funds transfer (EFT). It purposely looked into those innovations in relation to their influence on profitability and return on assets (ROA) of Lebanese commercial banks. Data was collected through a research questionnaire, and statistical analysis was done using the Package of Social Sciences Software (SPSS). The results revealed that there is a significant positive impact of bank innovations on profitability and return on assets of Lebanese commercial banks and significance tests also showed that the impact was statistically significant. Based on the results of the study, it can be concluded that bank innovations affect profitability and return on assets (ROA) of commercial banks in Lebanon positively.

Quantifying Factors Influencing the Adoption of Internet Banking Services in Greece

2011 ◽  
pp. 24-37
Author(s):  
M. Makris ◽  
V. Koumaras ◽  
H. Koumaras ◽  
A. Konstantopoulou ◽  
S. Konidis ◽  
...  
Keyword(s):  
Banking System ◽  
Internet Banking ◽  
Ease Of Use ◽  
Perceived Usefulness ◽  
The Internet ◽  
Banking Services ◽  
Business Partners ◽  
Electronic Transactions ◽  
Internet Banking System ◽  
Internet Banking Services

A growing phenomenon in the Internet is the rising exploitation of sophisticated security means (e.g. cryptography, digital signatures etc.) toward the development of novel commerce services for providing electronic transactions, collaborating with business partners or serving customers, regardless of geographical and time limitations. This paper discusses, presents and elaborates on the various factors that affect the adaption of Internet banking services in Greece. In particular, it deals with the factors that have been developed within the framework of providing e-banking services over an insecure shared medium like the Internet and affect the Internet Banking customer acceptance. A factor analysis is performed based on the gathered results provided by customer-questionnaires of ALPHA Bank branch in Greece in order to quantify the various parameters that affect the use of an Internet Banking System. The findings of the analysis show that despite the fact that Internet Banking in Greece is steadily increasing its penetration, factors like security, ease of use and perceived usefulness of a system play a major role on the final decision of the customer to adopt an Internet Banking System.

scholarly journals LEGAL PROTECTION FOR USERS OF INTERNET BANKING CUSTOMERS FOLLOWING CHANGES IN INFORMATION AND ELECTRONIC TRANSACTIONS LAW

2019 ◽  
Vol 6 (1) ◽  
pp. 54
Author(s):  
Azharuddin Azharuddin
Keyword(s):  
Financial Services ◽  
Commercial Banks ◽  
Personal Data ◽  
Legal Protection ◽  
Internet Banking ◽  
The Internet ◽  
Electronic Information ◽  
Customer Data ◽  
Banking Service ◽  
Electronic Transactions

The presence of the Internet Banking service has offered a number of convenience and flexibility in conducting transactions, both between the bank and its customers, the bank and merchant, bank with the bank and the customer with the customer. However, this simplicity does not mean no risk. In addition to the Internet Banking service provides convenience, also in fact have some risks. The risk of a new character and is a challenge for practitioners and experts in the field of Internet Banking service to handle it, so it becomes important to discuss the legal efforts to protect customers' personal data in the operation of Internet Banking service after changes in legislation and elektronic information transaction. Forms of protection against customer data in Internet Banking in Indonesia are from several types of regulations that have regulated internet banking, namely Bank Indonesia Regulation Number 9/15 / PBI / 2007 concerning Application of Risk Management in the Use of Information Technology by Commercial Banks and Act No. 19 of 2016 concerning Amendments to Act No. 8 of 2011 concerning Electronic Information and Transactions along with the Financial Services Authority Act in the section on consumer protection

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