Technological Banking Innovations and Financial Inclusion by Commercial Banks in Nairobi City County, Kenya
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Date
2020-01
Authors
Njoki, Grace Wanjiku
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Financial inclusion is the provision of financial services at affordable costs to sections
of underprivileged and low-income segments of society, in contrast to financial
exclusion where those services are not available or affordable. Failure to constantly
redesign strategies that help the commercial banks adapt to changing business
environment may lead to a strategic mismatch between what they offer and what
markets demands. The objective was to study Technological Banking Innovations
and financial inclusion by commercial banks in Nairobi County Kenya. The study
was anchored on the theory of financial intermediation, diffusion of innovation theory
and Silber’s Constraint theory of Innovation. The study used a descriptive research
design and a positivism philosophy because the conceptual hypotheses were drawn
from existing theories and identified knowledge gaps as founded on the research
design. Multiple regression model was employed in this study. For the purpose of this
investigation, the target population included all the 42 registered commercial banks
operating in Nairobi County, Kenya in the year 2016. Purposive sampling technique
was used to determine the sample size. Thirteen (13) selected banks that had
successfully implemented technological banking innovations in Nairobi County were
purposively sampled for the study. Both primary and secondary data was used in this
study. Primary data was collected using questionnaires. Secondary data on mobile
bank transactions and mobile phone subscriptions in the banks for the period between
2011 and 2016 was obtained from Central Bank of Kenya, Kenya National Bureau of
Statistics and the Banking survey manuals. Questionnaires were administered to
randomly selected respondents. The confirmatory test for multicollinearity was done
using the Variance Inflation Factor. Data was analyzed using descriptive statistics
(mean and standard deviation) and inferential analysis (correlation, Goodness of Fit,
analysis of variance, F statistic/significance of the study variables and regression of
coefficients) which were used to draw inferences on the relationship between the
study variables. Data was presented using tables and figures. Results of the study
indicated that the predictor variables; mobile banking, agency banking, electronic
banking outlets and internet banking have an influence on financial inclusion.
Correlation results also indicated that mobile banking, agency banking, electronic
banking outlets and internet banking were positively associated with financial
inclusion. Additionally, the regression findings indicated that mobile banking, agency
banking and electronic banking outlets were statistically significant predictors of
financial inclusion. However, Internet banking had a significance level of 0.586 which
is higher than the conventional threshold of 0.05 which rendered the variable as
statistically insignificant in prediction of financial inclusion. The findings concluded
that mobile banking, agency banking, electronic banking outlets and internet banking
have an influence on financial inclusion with the technological innovations being well
adopted by the customers in the respective banks .The study recommended that the
banks’ management should make use of these research findings to come up with
innovative approaches of improving financial inclusion while maintaining the existing
ones in the conduct of their business so as reach more clients with their products and
services.
Description
A Thesis Submitted to the School of Business in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Science (Finance) of Kenyatta University, January 2020
Keywords
Technological Banking Innovations, Commercial Banks, Nairobi City County, Kenya