Mobile Banking Services and Financial Performance of Tier One Commercial Banks in Kenya

Abstract

Kenya mobile banking arena is fast developing and shaping the landscape of cashless transactions exponentially. With introduction of mobile services in the banking industry, the commercial banks are faced with the challenge of embracing the new technological advances in the industry or lose business. The purpose of this study was to determine the effects of mobile banking services on financial performance of commercial banks in Kenya. The study was guided by the following specific objectives; to examine the effects of mobile banking withdrawal and deposits, loans, payment of bills and funds transfer on the financial performance of commercial banks in Kenya. The study was anchored by the following theories; diffusion of innovation theory, agency theory and stewardship Theory. This study employed descriptive research design. The study targeted 8 tier one commercial banks. The study used secondary data which was obtained from the published financial statements of the tier one commercial banks in Kenya. Descriptive statistics and inferential statistical techniques were used to analyze the data and presented in terms of tables and figures. Multivariate regression model based on cross sectional pooled data from the annual reports and other financial statements to assess the effect of mobile banking services on the financial performance was conducted. Regression analysis and correlation analysis was carried out to analyze the relationship between the variables. Based on the findings that mobile withdrawals have a significant positive influence on financial performance of tier one commercial banks in Kenya it can be concluded that banks should always ensure that the mobile withdrawals are efficient and are sound to facilitate participation of the customers in using the banking applications as well as contribute to greater returns. On the other hand, the findings that mobile loans have a significant positive influence on financial performance of tier one commercial banks in Kenya it can be concluded that banks should always ensure that the mobile loans are efficient and are sound to facilitate participation of the customers in using the banking applications loans services as well as contribute to greater performance. Similarly, the findings that mobile banking payment of bills have a significant positive influence on financial performance of tier one commercial banks in Kenya it can be concluded that banks should always ensure that the mobile banking payment of bills are efficient, effective and are sound to facilitate participation of the customers in using the banking applications services as well as contribute to greater performance. On the mobile banking funds transfer, the findings indicate that there is a significant positive influence on financial performance of tier one commercial banks in Kenya it can be concluded that banks should always ensure that the mobile banking funds transfer are efficient, effective and are sound to facilitate participation of the customers in using the banking applications services on money transfer as well as contribute to greater performance. The study recommends that tier one commercial banks in Kenya should always offer mobile banking loans services at lower interest rates to encourage more borrowers. It is recommended that tier one commercial banks in Kenya should always develop appropriate mobile banking payment of bills services which are informed by the changes in the environment and that accommodate the common customers in Kenya.