Challenges of internationalization of banking operations by Kenya commercial bank limited

Abstract

ternational trade has propelled the development of banks within the international financial system. Therefore, the banking activities are increasingly becoming international. However, internationalization of bank operations in Kenya and globally has been facing various challenges. This study therefore sought to determine the challenges involved in the internationalization process of banking operations by KCB. This research study used a case study design as it only focused on Kenya Commercial Bank. The study used both primary and secondary data. In the collection of primary data the study used interview guides. The interview guide was administered to 3 international business managers and 3 operations managers from KBC branches in Moi Avenue, Tom Mboya and Biashara Street. The secondary data was collected from various sources like journals, internet, textbooks, and magazines and paper presentations at conferences. The validity of the research instruments was established by seeking opinions of experts in the field of study especially the supervisors. Since data that was obtained in this study was qualitative, content analysis was used in the analysis. Data was then presented in a prose form. The study established that the challenges that Kenya Commercial Bank was facing include market risk as a results of stiff competition, poor information communication technology, poor infrastructure, international fraud, legal challenges, liability to foreignness, transparency and corruption, state of local economy, stability of currency, financial resources, inflation level, taxation level, entry mode, timing of entry, language, religious belief, organizational changes, availability of skilled labor, involvement of labor unions, employment regulations and nature of legal system and laws. This study concludes that the most common challenges facing Kenya Commercial Bank in its internationalization of operations can be categorized into market challenges, political challenges, legal challenges, economic challenges, geographical challenges internal challenges and cultural challenges. This study therefore recommends that commercial banks should fully comply with the requirements of the host country and engage with the regulators and other public bodies regularly. The study recommends that managers of commercial banks be enlightened on the opportunities that exist in untapped and prospective global markets for profit growth and satisfaction purposes. Further, Through experience, research and statistics international commercial banks should evaluate critically the market conditions to avoid being trapped in unfavorable market.