The effects of technological innovations on the financial performance of the commercial banks in Kenya

Abstract

A fundamental assumption of much recent research in operations improvement and operations learning has been that technological innovation has a direct bearing on performance improvements (Upton and Kim, 1999). This study therefore sought to investigate the effects of technological innovation on the performance of commercial banks in Kenya. This study used a descriptive survey. The population of interest in this study comprised commercial banks in Kenya. The study conducted a census survey owing to the small number of commercial banks in Kenya. Primary data was collected using a questionnaire with close ended and open ended questions administered to the management staff of the commercial banks. The respondents were senior, middle and low management staff in the respective banks. Secondary data on financial data were obtained from annual reports of commercial banks which were obtained from the central bank and from individual commercial banks. Data for this study was both quantitative and qualitative hence both descriptive and content analysis techniques were employed. Content analysis was used to analyze the qualitative data collected while descriptive methods were used to analyze quantitative data. Tables were used to summarize responses for further analysis and facilitate comparison. This generated quantitative reports through tabulations, percentages, and measure of central tendency. The study concludes that the banks had employed various technological innovations. These included ATM services, mobile phone transactions and internet based banking services. The study further concludes that technological innovations had lead to improved financial performance of commercial banks in Kenya. This was through increased bank sales, profits increment and return on equity. The study recommends that for banks to be highly competitive, they need to employ modern technological innovations such as internet based banking services.