Contribution Of Mobile Banking Towards Financial Performance Of Commercial Banks In Kenya

Abstract

Financial institutions in Kenya have adopted mobile services to provide crucial banking services to customers in Kenya. This study was quantitative in nature. It also discusses the effect of process, product and technological development on delivery of the mobile banking service. Its impact on financial performance of financial institutions in Kenya as well as the provision of services from banks’ perspective. This project seeks to help quantify the profitability of mobile banking in Kenya. It discusses the basic motive of banks to adopt M-banking services which has been facilitated by increased competition in the market and the need to provide more and better service delivery to customers. This study aimed at bringing out the positive and negative contributions of mobile banking in the banking industry and the general impact of it on the nation’s financial performance. The results show that e-banking has increased the profitability of banks; it has enabled the banks to meet their costs and earn profits even in the short span of time. For banks, the main motive to adopt e-banking is to increase their clientele, to retain their customers, reduce costs and make profits. The research was conducted through a survey design and secondary data from financial statements of seven banks in Kenya. Data collected was quantitative and was analysed by use of spss program. Some qualitative analysis was done to be able to establish the opportunities that mobile banking has helped in attaining financial performance. The research shows that mobile banking to a larger extent impacts the financial performance of commercial banks in Kenya in that it helps reduce unnecessary cost, increase efficiency and improves on service delivery to customers. This on the other hand increase the banks profits in the long run. The study concludes that Adoption of mobile banking is very important in the improvement of financial capital adequacy of commercial banks and profitability. Mobile banking is being used to improve financial operations. The banks have put in place measures become more competitive by training its staff, investing in research and development of technology. The study recommends that for all the commercial banks to earn more profit increase the number of customers and for their businesses to grow further they have to invest more as well as embrace the adoption of market innovative strategies. It also recommends that banks should adapt the new technologies being introduced in order to cope with the fast changing technology like use of tablets. To theory this study recommends that research into the innovation theories should be done with an aim of validating the theories to the current operating environment of banks. For further research the study suggests that commercial banks should investigate the effects of innovation strategies. The same study should also be conducted in other types of industries