The Effects of Strategic Alliance Between Mobile Service Providers and Commercial Banks on Banks Performance in Kenya

Abstract

The main objective of this study was to determine the effects of strategic alliance between mobile service providers and commercial banks on banks performance in Kenya. This research was guided by Resource Dependence Theory, the Strategic Alliance Dynamism (SAD) and the Transaction Cost Theory. This study adopted a descriptive research survey. This design is the most suitable for this study. When using this design, an in-depth and narrative description of numbers organizes the data into patterns that are easy to understand allowing me to compare the many different variables at the same time. The target population for the research were three mobile telecommunications companies, Airtel, Orange Mobile and Safaricom Limited, and the eleven banks listed in the Central Bank of Kenya. The study adopted the use of a questionnaire and document analysis as the main research instrument. The data from the completed questionnaires were collected, coded and analyzed in order. It was then analyzed and presented by use of the computer applications. Descriptive statistics approach were used for analyzing and presenting the data in this research. Measures of central tendency was used to analyze the results. The results show that as the annual value moved through mobile banking increases, the profitability of the commercial banks have increased. The research shows that strategic alliance with mobile service providers to a larger extent impacts the performance of commercial banks in Kenya in that it helps reduce unnecessary cost, increase efficiency and improves on service delivery to customers. Commercial banks in Kenya have adopted mobile services to provide crucial banking services to customers in Kenya. This was well explained by the F critical at 5% level of significance which was 0.00 and the F critical (value = 16.377). In addition, the R squared value was above average at 63% showing that the effects of strategic alliance between mobile service providers and commercial banks was significant. The study recommends that policy makers consider strategic alliances with mobile service providers in their formulation of policies because of the technological developments and the expected switch from physical branch networks to technologically supported banking services.