Paper Title
ELECTRONIC BANKING AND PROFITABILITY OF COMMERCIAL BANKS IN KENYA.
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Registration ID: IJNRD_305523
Published ID: IJNRD2504284
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Keywords
Card banking, Commercial banks, Internet banking ,Mobile banking, POS banking, Profitability, Rivalry, Technology
Abstract
Commercial banks have a crucial role in mobilizing financial resources for investment and wealth creation, making them an important intermediary for financial services in Kenya. In doing this banks must strive to attain favorable profitability levels to enable them cover their operating costs and foster growth. Driven by advancement in technology, the banks have been able to establish E-banking platform which is comprised of services such as internet banking, m-banking, card banking and POS banking. This has enabled the banking sector to serve customers efficiently. Although investment in technology has presented banks with numerous advantages, on the other hand laying the technological infrastructure takes huge amounts of the banks’ financial resources. This is evidenced by the huge budget allocations for maintenance of their tech-based assets. With this demand, it is imperative that commercial banks need to observe their operating costs and risks link with electronic banking so as to maximize on profitability. Given this context, the intent of this research was to analyze the impact of e-banking on the financial health of these financial institutions in Kenya. The research objectives were to ascertain the effect of internet banking, mobile banking, card banking and POS banking on the profitability of commercial banks in Kenya. The research was supported by the subsequent theories: Innovation theory of profits, technology acceptance model, theory of planned behavior, innovation diffusion theory, and self-determination theory. A descriptive research design was adopted. The study focused on a period of 5 years from 2018 to 2022. The target audience was the 39 financial institutions in Kenya. A census was adopted due of the limited population size. The research employed both primary and secondary data. Primary data was collected by interviewing commercial banks senior employees and while secondary data was gathered from commercial banks annual financial statements and CBK’s Annual Banks’ Supervision Reports. Data was then analysed utilizing descriptive and inferential statistics and displayed in form of tables, graphs with appropriate descriptions. A regression model was adopted to illustrate the link between the variables. Diagnostics tests carried out were Normality of distribution tests, multicollinearity tests and homoscedasticity tests. To address ethical considerations, the researcher built rapport with the respondents by ensuring their confidentiality and providing them with an authorization letter from the university and research permission from NACOSTI. The findings revealed a positive and significant relationship between mobile banking and profitability (p=0.019); there was a significant relationship between internet banking and profitability (p=0.037); there was a positive and insignificant relationship between card banking and profitability (p=0.226) and there was positive and insignificant relationship between POS and profitability (p=0.431) of licensed commercial banks in Kenya. Further the study concludes that there was business rivalry in three sets of channels: Mobile banking-Internet banking, Internet banking-POS banking; point of sale banking-card banking. It is recommended for the banking sector to further strategize by enhancing the channels based on the competition and they should work on a trade-off set of strategies in deciding which channels to enhance as some are rivals. This study recommends further research for others in the area of mobile money banking and Profitability and what factors could be challenging this relationship. Further research should also focus on how mobile banking and internet banking can be integrated for positive relationship.
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How To Cite (APA)
Benjamin Mbondo Kyalo & Dr. Mark Suva (April-2025). ELECTRONIC BANKING AND PROFITABILITY OF COMMERCIAL BANKS IN KENYA.. INTERNATIONAL JOURNAL OF NOVEL RESEARCH AND DEVELOPMENT, 10(4), c498-c505. https://ijnrd.org/papers/IJNRD2504284.pdf
Issue
Volume 10 Issue 4, April-2025
Pages : c498-c505
Other Publication Details
Paper Reg. ID: IJNRD_305523
Published Paper Id: IJNRD2504284
Research Area: Other area not in list
Author Type: Foreign Author
Country: mutomo, kitui, Kenya
Published Paper PDF: https://ijnrd.org/papers/IJNRD2504284.pdf
Published Paper URL: https://ijnrd.org/viewpaperforall?paper=IJNRD2504284
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