Survey of the value of information and communications technology (ICT) in the banking industry in Kenya

Abstract

The purpose of this study was to determine the role that ICT played in the value creation of services in the Kenyan banking sector. The study had two objectives, namely, to determine the business value of ICT in terms of business investments, productivity and consumer value creation and to determine the challenges faced in employing ICT as a value-creation support system. The conceptual model employed by the study was a modified value-chain model similar to that developed by Michael Porter. This model essentially examines how Information Communication Technology (ICT) adds or creates value across all the functional areas of a Bank, covering the front- and back office operating environments. Value addition/creation was defined from the perspective of improved business performance that entails reduced costs of doing business, improved organizational communications, enhanced service quality and business process reengineering. The study used an exploratory survey design. Since the population was small (41 Banks), a census study was conducted. Data was collected by means of a questionnaire. The respondents were senior managers who were distributed across all the functional areas e.g. Marketing, Credit and Risk Management, Corporate and Institutional Banking, Operations and IT. One questionnaire was submitted per respondent organization. SPSS software was used to analyze the data The main conclusion is that ICT is rapidly gaining acceptance as an aid to the creation of business value as is seen from the data reflecting its usage across the banking industry. However, only traditional ICT products seem to dominate the industry, an indicator of the slow diffusion of the latest technology into the sector. The study recommended that the legal framework be reviewed to permit faster adoption of new value adding state of the art information and communications technology. Additionally, banks should enable faster diffusion of existing technology through achieving cultural transformations-changing themselves into learning organizations. They should also seek innovative use of both existing and emergent technologies.