The effect of financial innovations on the competitiveness of commercial banks in Kenya

Abstract

Improvement of financial innovations is widely recognized as one of the essential elements in strengthening the competitiveness of an entity. A sharp acceleration in the pace of innovation, deregulation and structural change in recent years has transformed the international financial system in many important ways and the advances in computer and telecommunication technologies make many of the innovations possible in the present world. For the purpose of this study the researcher sought to determine the effect of financial innovations on the competitiveness of commercial banks in Kenya. This study adopted a descriptive research design as it is concerned with finding out the what, where and how of a phenomenon. The focus of descriptive research is the careful mapping out of circumstances, situation or set of events to describe what is happening or what happened. The target population of the study constituted of 43 registered commercial banks in Kenya who were senior managers, relationship/branch managers finance officer at commercial banks in Kenya. The study administered the questionnaires which included structured and unstructured questions to all respondents since it was the most appropriate way to gather information also secondary data was derived from banks websites, central banks websites and various publications. Descriptive statistics as mean, standard deviation and frequency of distribution were used to analyze the data. Data presentation was done by use of tables for ease of understanding and interpretation. This study found out that there is a direct relationship between financial innovations and competitiveness of commercial banks. The absolute values indicate that Process and technological innovations had greater weight when it comes to determining the competitive level of a commercial bank. This study recommends that commercial banks should put more emphasis on technological advancement so as to enhance the processes they offer to the general public and this will enable the bank to offer efficient and effective services to the public and as a result of this they will be very competitive in the markets.