The Impact of Internet Banking on Financial Performance of Commercial Banks in Kenya

Abstract

The purpose of this study is to examine the effect of internet banking on the financial performance of commercial banks in Kenya. The study attempts to present status of internet banking in Kenya and it's implications for the Kenyan banking industry. The internet has become the world's most expensive public communication system that rivals the global telephone system in reach and range. Customers' expectations in terms of service delivery have increased in terms of service delivery and other key factors. The widespread availability of internet banking is expected to affect the mixture of financial services and financial performance. Internet banking has changed the dimensions of competition of in the retail banking sector. This study estimates internet banking intensity and bank performance indices using secondary data. The measure of financial performance used in this research is Return on assets and the independent variables are natural Log of assets, Ratio of loans to total assets and internet banking .Results indicate that the increasing of internet as an additional channel of marketing banking services has significantly improved the financial performance of commercial banks in Kenya. Internet banking has also significantly improved banking efficiency in rendering services to customers.