The business value of information communication technologies in the financial departments of commercial banks in Kenya

Abstract

There began to appear theoretical arguments regarding the role of information technology (IT) in creating the value chain at firms and this opened up new lines of inquiry (Porter and Millar, 1985). This study was a survey on the business value of information communication technologies in the financial departments of commercial banks in Kenya. The collected data has been analyzed interpreted in line with the aim of the study namely: to delineate the extent to which various facets of information communications technology (ICT) are used by the commercial banks in Kenya; and secondly, to investigate the economic benefits of the information communications technology and innovations used by commercial banks in Kenya at their finance departments. Data was collected from a population that comprised of forty-four commercial banks incorporated and, or licensed to operate in Kenya by 2007. This gave a response rate of seventy one (70.8%) percent. Based on the results from data analysis and findings of the research, based on the objective of the study; firstly, it was found that the three key functions that are performed by finance departments of commercial banks are to perform or give short-term banking forecasts, at least monthly; to exercise day-to-day control of banking positions and lastly to cover the interest-rate risk. Secondly, it was found that the two commonly used technological tools in cash management in the finance department are the financial software and e-banking. Thirdly, the five key economic benefits of the information communications technology and innovations that have accrued to the commercial banks in Kenya at their finance departments include: ICT use has ensured proper management of account balances at value dates; ICT has helped in the monitoring and optimization of the sales-cash circuit; ICT has led to system responsiveness to changing user needs; and ICT has helped in the coverage of exchange-rate risk. Only eight (8) components/ factors were extracted in factor analysis on the economic benefits of the information communications technology and innovations used by commercial banks in Kenya at the finance departments. Some eight economic benefits that have not been realized by the financial department need to be addressed within the commercial banks in Kenya, especially flexibility to produce professional reports like graphics and desktop publishing. Areas of further research that were identified include a similar study to be carried out to determine how the relationship between ICT planning intensity and financial performance, and benefits if any be quantified by the organizations. The greatest hurdles while conducting the study were time, literature availability and irrelevancy.