Information technology investment and performance of commercial banks in Kenya

Abstract

Over the years, technology in business has been changing rapidly as the global environment becomes highly competitive and innovative. The use of information technology (IT) then has become very vital to all organizations that intend to remain competitive in the market. Organizations therefore are increasingly investing in IT. Despite this rapid growth in investment in information technology, there is no evidence to prove that there is a convincing link between investment in information technology and organizational performance. The need for this study therefore arises, the objectives of the study are to establish the level of IT investment in commercial banks in Kenya, to determine the level of integration of IT into business functions of commercial banks in Kenya, to determine the relationship between IT investment and performance of commercial banks in Kenya. Several studies have been undertaken internationally on information technology investment and performance. The population of the study comprise of all the commercial banks operating in Kenya. According to Central Bank of Kenya (2014) there are 43 commercial banks operating in Kenya and all of them participated hence the study was a census. The study used primary data which was collected using questionnaires. Data were analyzed using frequencies, percentages, mean, standard deviation and regression analysis. The study findings established that, Investment in information Technology is inevitable. Organizations are increasingly recognizing the importance of an effective IT infrastructure. Further conclusions are made that skills and experience enable firms to coordinate activities and make use of their resources. Different firms may have differential technical IT skills and experiences that enable them to manage their IT investment risk better. A firm‟s experience improves the quality of products and services and lowers its costs. Limited skills and experience within an organization will typically limit responses to rapid environmental change. It is critical that a firm‟s IT staff hold a combination of skills knowledge of IT elements and knowledge of technology management for the efficient management of a firm‟s IT resources.