The effect of internet banking on cashflow s of commercial banks in Kenya

Abstract

The promise of ICTs in the banking sector has been seen in terms of its po tential to increase customer base, reduce transaction costs, improve the quality and timeliness of response, enhance opportunities for advertising and branding, facilitate self - service and service customization, and improve customer communication and relat ionship (Garau, 2002). Internet banking is the latest development that has added a new dimension to banking transactions by making it more convenient and also contributes to the elimination of long wearisome queues in banking halls. Nonetheless, there a re some problems which do not encourage banking through the internet and causes many customers to be physically present in the bank premises instead of taking advantage of internet banking though i nternet banking has improved banking efficiency in renderin g services to customers. Financial institutions in Kenya cannot ignore information systems since they play an important role in their operations because customers are conscious of technological advancements and demand higher quality services (Okiro, Ndungu 2013). This study sought to determine the impact of internet banking on cashflow of commercial bank in Kenya . The study was conducted on 43 commercial banks in kenya that been using internet banking since year 2009 to 2013, where secondary data from t he period of 2009 to 2013 was used in the analysis. Regression analysis was used in analysis the data. From the finding it was revealed that there was great variation in cashflow of commercial banks that had adopted internet baking due to changes in inter net banking, size of the bank, bank deposits, wage and bank’s profitability . From the finding on the Correlation coefficient the study revealed that there was strong positive relationship between cashflow of commercial banks and internet banking, size of t he bank, bank deposits, wage and bank’s profitability