The Relationship between Electronic Banking and Financial Performance among Commercial Banks in Kenya

Abstract

Banking industry has been in a process of significant transformation. The force behind this transformation of the banking industry is innovation in information technologies. Information and communication technology is at the centre of this global change curve of electronic banking system in Kenya today. It is against this background, this study investigated the relationship between e-banking and performance of Kenya banking system. Specifically, the study established whether there is relationship between the dependent variable i.e., performance measured by return on assets and the independent variables: investments in e-banking, number of ATMS and number of debits cards issued to customers as proxy for e-banking. The study used secondary data. The data was collected from annual report of target banks and Central Bank of Kenya. The study used both descriptive and inferential statistics in analyzing the data. In general the study revealed that e-banking has strong and significance marginal effects on returns on asset in the Kenyan banking industry. Thus, there exists positive relationship between e-banking and bank performance. In general conclusion the electronic banking has made banking transaction to be easier by bringing services closer to its customers hence improving banking industry performance.