Strategies adopted by Commercial Banks in Kenya in their retail banking

Abstract

This study sought to investigate the strategies adopted by commercial banks in their retail banking. The study targeted the 20 commercial banks engaged in retail banking. Response was received from 11 banks out of the 20 banks constituting a response rate of 55%. The data was collected with the help of a personal interview guide. The data was then analyzed by use of a statistical package for social sciences (SPSS) and presented in form of percentages, frequency tables, mean and standard deviation. Banks that adopted a differentiation focus or cost focus strategy accounted for 65% of the total, while those that adopted a broad strategy using cost leadership accounted for 35%. The reason why most banks adopted a focus strategy was because they had a medium size branch network that was only idle for a focus strategy. Overall most banks have performed well in retail banking with some exceeding their target customer numbers in the last two years. Profitability contribution of retail banking to overall bank performance for most banks was over 30%. The success in retail banking was achieved due to development of strategies that met the market requirements. Those that adopted a cost strategy were able to reconfigure their processes to reduce costs and then pass over the benefit to their customers. Those that adopted a differentiation focus strategy were able to provide convenience to their customers.