E-Banking Strategy and Performance of Commercial Banks in Kenya

Abstract

The study focus was on the role of e-banking strategy on a bank’s performance in the country. The specific objective is to investigate the role of mobile money strategy, agency money strategy, internet money strategy, and the A-T-Ms strategy on banks' performance in the country. A descriptive research design was employed for this study. The study targeted 39 banks that were in operation during the period of 2016 – 2020. Therefore, the total number of observations was 195. A secondary dataset was employed for the study which was obtained from various sources including the annual reports and publications of banks, the CBK, and Communication Authority of Kenya. The data analysis employed inferential and descriptive statistics. In descriptive statistics, percentages and frequencies are employed while inferential statistics included correlation and regression analysis. According to correlation analysis, agency banking (r = 0.578, p = 0.000), mobile banking (r = 0.536, p = 0.000), ATM banking (r = 0.644, p = 0.000) and internet banking (r = 0.431, p = 0.000) have a significant relationship with banks performance. The research concluded that use of agency banking, mobile banking, ATMs, and Internet banking had positive outcomes and significantly affected performance of banks. The study also concluded that these e-banking strategy had a positive and significant effect on both ROA and ROE of commercial banks. Therefore, they had a positive and significant effect on performance of commercial banks. The study did a recommendation for commercial banks that there is a need for an investment in advanced technology, a new way of doing things, and capacity enhancement to increase utilization of e-banking services. Additionally, banks ought to put in resources to train, educate, and enlighten their customers on the benefits of utilizing e-banking services.