The Effect of Mobile Banking on the Financial Performance of Commercial Banks in Kenya

Abstract

The study was carried out to determine the effect of mobile banking on the financial performance of commercial banks in Kenya. Various independent variables were identified and these included: income, salaries and wages, depreciation on plant and equipment, rent for branch premises, stationery, telephone and postage, amortization of Information Communication and Technology (ICT) systems and other administrative costs. The study employed a linear multiple Regression to establish the effect index of mobile banking on the financial performance of commercial banks in Kenya. The population of interest in this study consisted 44 commercial banks registered and licensed under the Banking Act Chapter 488 of the Laws of Kenya and were inexistence by 1st May 2010. The analysis consists of responses from 34 commercial banks representing 77% response rate which was considered sufficient for data analysis. The findings indicated that mobile banking had great effect on staff salaries and wages 17% followed by rent paid for branch premises16%. Income came in third with 15%, other administrative expenses 14%, Depreciation on plant and equipment and amortization on ICT systems each registered 13%. Least effect was recorded on the stationery, telephone and postage. The overall effect of mobile banking on the financial performance of commercial banks was 72%. This index being above 50% indicates that mobile banking has had positive effect of the financial performance of commercial banks in Kenya.