Virtual Banking and Growth of Customer Base of Commercial Banks in Nairobi County, Kenya
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Date
2024-05
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Kenyatta University
Abstract
Virtual banking is a valuable and effective tool that fosters growth, encourages innovation, and boosts competitiveness, thus plays a crucial role in how services are delivered currently. There is need to identifying the elements that influence consumer adoption of virtual banking, which could aid commercial banks in creating more effective customer acquisition and retention strategies. The general objective of the study was to examine the effect of virtual banking on growth of customer base of commercial banks in Nairobi County, Kenya. The study specifically sought to; determine the effect of virtual banking adaptability; establish the effect of virtual banking affordability and assess the effect of virtual banking accessibility. This study was anchored on; Innovation Diffusion theory, Theory of Planned Behaviour and Technology Acceptance model. The study adopted descriptive survey research design and use stratified random sampling. The target population of the study was 504 where a sample size of 218 respondents was used. The researcher distributed 218 questionnaires to all the sampled population where 200 questionnaires were received giving a response rate of 91.7%. The test items in the study were checked by professionals, including research supervisors, financial colleagues, and other specialists in public finance management. Their feedback was used to make the necessary adjustments to the instrument, for example by removing the ambiguous items, spelling errors, and other typographical errors that may have been made, it helped to determine the extent to which the instrument gathered the intended information. Cronbach’s coefficient for Virtual banking adaptability α = 0.909, Virtual banking affordability α = 0.898, Virtual banking accessibility α = 0.835 were sufficient confirmation of data reliability for the independent variables since it has an average of 0.879 Cronbach’s alpha which was above 0.70 hence the research instrument was accepted.Pearson correlation coefficient of 0.733 shows that virtual banking accessibility had a positive significant correlation with growth of customer base (r = 0.733, p < 0.05). Virtual bank adaptability had a positive significant correlation with growth of customer base (r = 0.755, p < 0.05). The study established that virtual bank affordability had a positive significant relationship with growth of customer base (r = 0.895, p < 0.05). The overall R2= 0.834 indicates that 83.4 percent of the variation in growth of customer base was explained by the predictor of virtual bank accessibility, virtual bank adaptability, virtual bank affordability and internet while 16.6 % variation in the dependent variable is explained by other factors that were not included in current study. The beta coefficient of 1.071 means that when virtual bank accessibility increases by an additional unit, growth of customer base increases by 1.071. Virtual bank adaptability had a positive significant relationship with growth of customer base (β = 0.528 p < 0.05). The beta coefficient of 0.528 means that when virtual bank accessibility increases by an additional unit, growth of customer base increases by 0.528. Virtual bank affordability had a positive significant relationship with growth of customer base (β = 0.867 p < 0.05). The beta coefficient of 0.867 means that when virtual bank affordability increases by an additional unit, growth of customer base increases by 0.528.The study findings showed that adaptability, affordability and accessibility of virtual banking influence customer base growth. The study recommends for a review on the cost of online transactions so as encourage more customers to use the virtual banking platforms. There is need also to enhance network coverage in the country and especially in the remote places.
Description
A Research Project Submitted to the School of Business in Partial Fulfilment for the Award of Degree in Master of Business Administration of Kenyatta University, May 2024.
Supervisor
Janesther Karugu