Strategic responses by national industrial credit bank to changes in asset based financing sector in Kenya

Abstract

The environment in which organizations operate is constantly changing and becoming more volatile and competitive. Banking industry has experienced a rapid growth in terms of asset financing products. This trend has triggered a lot of competition in the banking industry. NIC Bank was initially a non-financial organization specializing in industrial credit, therefore enjoyed a monopoly in the asset financing sector. However, organizations like the leasing companies, motor vehicle dealers have ventured into the sector and are offering asset financing too. For this reason NIC bank needs to rethink its strategy and come up with responses that will enable them continue to be the market leader in asset financing. This study was aimed at establishing strategic responses by NIC bank to changes in asset financing and the challenges faced when executing the strategic responses. The study employed a case study research design. The design was necessary because it brought out clearly an in-depth understanding of complex issues, experiences and new knowledge to what had already been known in previous studies. Since the design was a case study, census was used to have the entire population interviewed. Specifically, three staff from asset finance department, three from business banking, two from the debt management unit and another two from the customer service unit was involved to give necessary information. Primary sources of data was used in this study, this was carried out by use of interviews and various publications. Consequently, data collected was purely qualitative hence the main method used to analyze data was content analysis. From the findings, the study revealed that the bank had clear strategies to tackle strategic responses to changes in asset financing. The bank has integrated technology and innovation, diversification, strategic partnerships, effective operations, turnaround time, operating and finance leases amongst others. This study depicted the dynamic capability theory. NIC bank is interacting with a dynamic environment and they have been constantly changing to keep up with the environment. The study showed the organization has used various resources at their disposal in order to remain competitive. The study recommended that, it is very necessary for banks to understand the underlying sources of competitive pressure specifically on asset financing sector in order to formulate appropriate strategies and respond to competitive forces. It further recommended that the banks needs to look at what the competitors are doing to effectively design a strategy that relates the organization to its internal and external environment. The strategy should help banks to deal with future uncertainty by defining goal accomplishing procedures in asset financing. A cross sectional research is recommended so as to compare the strategies adopted by NIC bank and other Asset financing companies in Kenya