Digital financial innovations and financial deepening of commercial banks in Nairobi City County Kenya
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Date
2024
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Strategic Journals
Abstract
This study explored the effects of digital financial innovations on the financial deepening of Kenyan commercial
banks so as to gain a better understanding of this phenomenon. The study aimed to investigate the following
specific objectives: ascertain the impact of mobile phone banking, evaluate the influence of ATM banking,
ascertain the impact of online banking and determine the effect of agency banking on the financial deepening of
commercial banks in Kenya in the connection between financial innovations and financial deepening of
commercial banks in Kenya. The study was conducted in Nairobi City County since that was where the banks have
headquarters. The study was underpinned on the following theories the innovation diffusion theory, disruptive
innovation theory, agency theory and the market power theory. This study was conducted using descriptive and
explanatory research design that is cross sectional. The target audience consisted of 39 commercial banks that are
licensed and functioning in Kenya as of December 31, 2022. The research involved secondary panel data. The
primary source of secondary data was the annual banking report published by CBK. The analysis in this research
was conducted using the SPSS version 20. Multiple regression was used to examine the correlation between the
independent and dependent variables. The study's results were shown via the use of tables, charts, and figures.
The study found that mobile phone banking, ATM banking, online banking and agency had positive significant
effects on the financial deepening Kenyan commercial banks. The study concludes that mobile phone banking
allows banks to reach a larger customer base, especially those in remote areas where physical bank branches are
limited. With the widespread availability of ATMs across the country, customers no longer have to rely solely on
bank branches for their banking needs. Online banking offers convenience and accessibility for customers in Kenya.
Agency banking has significantly increased the accessibility of financial services for individuals in remote or
underserved areas. The study recommends that commercial banks can invest in user-friendly interfaces and
intuitive design to make mobile banking more accessible and convenient for customers. One-way commercial
banks in Kenya are enhancing their ATM services is by increasing the number of ATMs across the country. With the
increasing use of smartphones in Kenya, commercial banks can develop mobile banking apps that provide a
seamless and convenient banking experience. One way to enhance agency banking in Kenya is to recruit more
agents in rural and marginalized communities where traditional bank branches are scarce.
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Citation
Mundia, C. W., & Makori, D. (2024). Digital financial innovations and financial deepening of commercial banks in Nairobi City County, Kenya. The Strategic Journal of Business & Change Management.11(4) 159-178