Strategic Alliance Between Co-operative Bank of Kenya Limited and Safaricom Limited to Enhance Performance

Abstract

Strategic alliance between banks and telecommunication firms in mobile banking is of value to customers and the firms. The alliance adds value to the consumers as well as to the capital invested into the firms. In Kenya, adoption of electronic and mobile banking has been on the rise since introduction of mobile telephones in late 90s. Banks and mobile telecommunication firms have entered into strategic partnerships to provide mobile banking services. Cooperative bank has been seen growing very fast and increasing the market share rapidly. This has been successive through the introduction of various services that suit the low income earners. But the bank has been facing competition from other banks especially; Equity bank and Kenya Commercial bank of Kenya. Thus the bank projected that to be viable in the market, they need to partner with Safaricom Ltd- a mobile service operating company to facilitate easier way of money transfer. This research sought to find out the influence of strategic alliances on performance of Co-operative bank and Safaricom limited. The study adopted a case study design so as to undertake an in-depth and comprehensive inquiry. The study interviewed senior managers from Safaricom limited and cooperative bank. Content analysis was used to analyse the data and generate relevant results. This study established that mobile telephone firms receive cost and product related benefits more than other benefits while banks got market related benefits more than other benefits. Another key conclusion was that mobile banking services should pay more attention to those benefits that well address their needs. This study therefore recommends that strategic partnerships have benefits in major ways and that this concept should be employed by similar organizations in order to survive and sustain their operations in the competitive environment. The study will contribute to the existing vast body of knowledge in validating the need of strategic alliances in today’s environment. The study validates the need for organizational learning and consequently the theory of organization learning because specific knowledge can be transferred through licensing; tacit knowledge the knowledge embedded in an individual can only be transferred by learning alongside the individual and this can only be done when there is an alliance.