Alternative Banking Channels and Performance of Commercial Banks in Nairobi City County, Kenya.
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Date
2020
Authors
Motondi, Felix Omweri
Bula, Hannah
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journals
Abstract
Commercial banks have employed
alternative banking channels to reach out to
more clients and lower operational costs.
However, these channels have encountered a
variety of challenges raising questions on the
influence they have on performance.
Persistent system downtimes, network
failures, transaction errors, security concerns
and lack of customer confidence have driven
customers into seeking services in bank
branches resulting to congested banking
halls. The objective of this study therefore
was to assess the influence of alternative
banking channels on the performance of
commercial banks in Nairobi City County,
Kenya. The specific objectives of the study
were to examine the influence of agency,
mobile, internet and ATM banking on
performance of commercial banks in Nairobi
City County, Kenya. The theories that guided
the study were; Bank Led Theory, Innovation
diffusion theory, Agency theory, financial
intermediation theory and the Resource based
theory on performance. This study used
descriptive survey research design. 188
respondents from all commercial banks
operating in Nairobi City County was the
target population of this study out of which a
sample size of 94 respondents was selected
through simple random sampling. Primary
data was collected using a questionnaire. The
supervisor helped ascertain validity of the
instruments, whereas piloting was conducted
to improve on instruments reliability.
Quantitative data collected was classified,
analyzed and coded. The expected
parameters were calculated using the SPSS
program as the main statistical tool.
Descriptive statistics presented using charts,
graphs and frequency percentages were used
in measuring the central tendencies such as
mean and standard deviation and reporting
the data collected from the findings.
Qualitative primary data was analyzed via
thematic analysis. Apart from the inferential
statistics like regression analysis, other forms
of analysis such as ANOVA and correlation
were used to determine the relationship
between the study variables. The study found
out that agency, mobile, internet and ATM
banking have a positive influence on
performance of commercial banks in Nairobi
City county, Kenya. The study concluded
that; agency banking investments and
incomes favorably effect overall
performance of banks. Mobile banking alerts
assist customers to make informed choices
benefitting banks on decreased cost of
service delivery and enhanced consumer
convenience. The payback duration of
internet bank investments is lower than ten
years and incomes gained favorably affect
bank’s performance. The use of ATMs has
replaced labor intensive and paper-based
banking methods leading to quicker access to
services, convenience. This study
recommended that Commercial banks
continue offering alternative banking
channels for improved efficiency and
increased accessibility. The commercial
banks need to review and have a variety of
products and services available across the
alternative banking channels to mirror those
offered at branches. The study recommended
that Commercial Banks should review the
pricing models adopted to enable customers’
access products and service on alternative
banking channels affordably. In addition,
more security features be adopted to ensure that the system is up to date with most current
technology to avoid loss of funds for clients
through illegal system accesses.
Description
A research article published in International Academic Journal of Economics and Finance
Keywords
agency banking, alternative banking channel, ATM banking, internet banking, mobile banking, organizational performance, social media
Citation
Motondi, F. O. & Bula, H. (2020). Alternative banking channels and performance of commercial banks in Nairobi City County, Kenya. International Academic Journal of Economics and Finance, 3(6), 47-65