Paperless Banking and Financial Performance of Commercial Banks in Kenya
Muhoro, Duncan Iregi
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The banking industry has been undergoing a significant process of transformation. Novelty in information technology has been the force behind this transformation. Paperless banking which is a wide concept in banking is the automatic distribution of new and outdated banking merchandises and amenities straight to clients through paperless supportive networks. These channels include, and not limited to; internet investment, mobile financial transactions, and real time gross settlements. It’s from this contextual that the study sought to investigate the outcome of paperless banking on the financial performance of commercial banks in Kenya. The research specifically sought to investigate if there is a correlation between the reliant mutable financial performance as measured by return on assets (ROA) and return on equity(ROE), with the independent variables; internet investment, mobile investment and real time gross settlement which were measured by percentage of adoption of service and percentage of transactions. The following hypotheses were developed for empirical testing; internet banking, mobile banking and real time gross settlement lacks significant result on monetary performance of commercial bank in Kenya. A census research was done on all Banks in Kenya as regulated by CBK. The study used secondary data from 43 commercial banks operational in Kenya. The research used both inferential and descriptive statistics. Diagnostic tests were carried out to test for Normality and Heteroscedasticity tests. Data was coded and sorted using SPSS to produce descriptive statistics which was presented in form of tables. The study found out that mobile banking positively affect ROA but at 0.084 significance, RTGS come strong on affecting ROA at 0.022 significance and internet was the least contributor at 0.295, 1% increase in RTGS volumes increase ROA by 0.7985%.Therefore Internet and Mobile Banking has a positive outcome on financial performance of commercial banks though not at 5% significant. Further the results indicated that there was no strong correlation between the variables given that there was no matrix id greater than 0.7 for both models. This indicates lack of significant correlation between paperless banking and fiscal performance of Commercial banks in Kenya. Based on this conclusion, the study recommends that Commercial banks use RTGS to achieve on profitability and at the same time revamp mobile and internet banking platforms for customer service and loyalty.