Strategic Benefits and Challenges of Mobile Banking in Kenyan Commercial Banks

Abstract

Firms need to be flexible and respond quickly to changes in the market and competition. Increasing domestic and global competition, economic downturn, rapidly changing market trends, and volatile financial markets have all added to the pressure on organizations to come up with effective responses to survive and succeed. The popularity of mobile technology strategy is experiencing explosive growth as traditional banking practice has been transformed, placing opportunities for banks to maximize their share in the market, gaining competitive edge and improving on their profitability. The main objective this study was to identify the strategic benefits and challenges of mobile banking in the Kenyan commercial banks. The study employed a descriptive survey as its research design. The target population was all the commercial banks in Kenya. The study made use of both primary and secondary data. The primary data was collected by use of questionnaires which were coded and edited using SPSS statistical package summarizing data through the use of mean, standard deviation and percentages. The secondary data for this study was obtained from sampled banks documented strategies. From the findings m-banking increases sales volume, reduces the cost of distribution, can be used as an image product, is a source of revenue and increases customer satisfaction. The main strategic challenges of m-banking in Kenyan commercial banks are; restructuring challenges, customer reluctance and cost challenges, system failure, network vulnerabilities, software defects and operating mistakes, processing error and data loss due to virus. The study was important because it will help in better understanding the opportunities in mobile banking services in Kenya, its transformation of the financial services and its contribution to the financial performance of banks in Kenya. The study was significant to users of mobile banking in gaining better understanding of the advantages and limitations they face through the use mobile banking.