Mobile technology services and performance of deposit taking savings and credit cooperative societies in Kenya
Mugo, David Muchangi
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Kenya's Vision 2030 requires a vibrant and a stable financial system. Deposit-Taking Savings and Credit Cooperative Societies (SACCOs) are expected to playa key role towards the realization of this vision by spreading the financial services among Kenyans especially those not served by commercial banks. Despite their role in the economy, Deposit-Taking SACCOs continue to face a number of challenges including stiff competition for.membership from other deposit taking institutions, efficiency challenges characterized by poor information delivery channels and high operational costs, high demands for loans which they are unable to meet due to liquidity shortages and capital inadequacy among other challenges. To enhance their performance, Deposit-Taking SACCOs like other financial institutions have adopted 'and are using mobile technology services. However, the effect of these mobile technology services on performance of Deposit-Taking SACCOs has not been well studied. Even though some studies have indicated the potential of mobile technology services towards improving organizational performance, other studies indicate that they have no effect on organizational performance. Given these contradictions, this study sought to investigate the effect of these mobile technology services on performance of Deposit-Taking SACCOs in Kenya. The study addressed five objectives. The first four objectives were to determine the effect of mobile banking services, mobile communication services, mobile web services, and Saccolink debit card services on performance of Deposit-Taking SACCOs respectively. The fifth objective was to determine the moderating effect of government policies on the relationship between mobile technology services and performance of Deposit-Taking . SACCOs in Kenya. This study adopted positivism philosophy as it aimed at testing hypotheses derived from a predetermined conceptual framework. Descriptive and explanatory research designs were adopted using quantitative and qualitative approach to data collection, analysis and reporting. Using simple random sampling, the study was based on a sample of 86 Deposit-Taking SACCOs drawn from a target population of 110 Deposit-Taking SACCOs that were licensed by SACCO Societies Regulatory Authority as at 31 st December 2011. A structured questionnaire administered to two managers (from information technology and finance departments) in each Deposit-Taking SACCO was used to collect primary data. Additionally, secondary data covering five years on performance (membership and return on assets) of Deposit-Taking SACCOs was· collected. Descriptive statistics were used to explain the patterns in the collected data. While multiple linear regression model was applied on the quantitative data to generate coefficients and their corresponding t-statistics and p-values used to test hypotheses, qualitative data from the questionnaires was analyzed using content analysis. Inferential analysis revealed the existence of statistically significant positive effect of mobile banking services, mobile communication services and Saccolink debit card services on all the three performance indicators (efficiency, membership and return on assets) of Deposit-Taking SACCOs in Kenya. Additionally, the results indicated a positive moderating effect of government policies on the relationship between mobile technology services and performance of Deposit-Taking SACCOs in Kenya. The study therefore recommends more investments and increased utilization of mobile technology services within Deposit-Taking SACCOs. Additionally, the Government and other policy makers should formulate strategies aimed at encouraging increased innovation and utilization of mobile technology services within the Deposit-Taking SACCOs sub-sector.