ELECTRONIC BANKING AND PERFORMANCE OF COMMERCIAL BANKS IN MOMBASA COUNTY, KENYA
Abstract
Despite the rapid shift in adopting e-banking services over the last decade, the effect of e-banking on bank performance is still being debated. The purpose of this study was to examine the effect of electronic banking on performance of commercial banks in Mombasa County, Kenya. Drawing on the positivist research philosophy, the study utilized the non-experimental quantitative research methodology. A correlational, cross-sectional survey research design was employed to test the formulated research hypotheses. The target population consisted branch managers and operations managers of the 98 branches of the 39 commercial banks in Mombasa County, Kenya. A cross-sectional survey-based approach was used to collect primary data utilizing a self-administered structured survey questionnaire. The collected data was processed and entered into the statistical package for social sciences (SPSS) version 26 to create a data sheet that was used for data analysis. The data was analyzed utilizing descriptive statistics and inferential statistics. The Pearson’s correlation results indicated that automated teller machine banking, mobile banking, internet banking and smart card banking capabilities had positive and significant relationship with performance of commercial banks in Mombasa County, Kenya. The regression results showed that automated teller machine banking, mobile banking, internet banking and smart card banking had a positive and significant effect on performance of commercial banks in Mombasa County, Kenya. However, the regression results indicated that mobile banking had a negative and significant effect performance of commercial banks in Mombasa County, Kenya. The conclusion was that electronic banking significantly predict the performance of commercial banks in Mombasa County, Kenya. The study provides important managerial recommendations, policy recommendations and areas for future research. It is imperative for the managers to develop electronic banking to foster the performance of commercial banks in Mombasa County, Kenya. Policy makers should consider initiating policy review to encourage stakeholders to develop electronic banking to foster the performance of commercial banks in Mombasa County, Kenya. Future researchers should consider examining the effect of electronic banking on performance of commercial banks in other regions or contexts.
Key terms: Automated Teller Machine, Electronic banking, Firm Performance, Internet Banking, Mobile Banking, Electronic Fund Transfer
CITATION: Umugwaneza, J. P., & Kising’u, T. M. (2023). Electronic banking and performance of commercial banks in Mombasa County, Kenya. The Strategic Journal of Business & Change Management, 10 (2), 767–790.
Full Text:
PDFReferences
Aghimien, D., Aigbavboa, C., &Matabane, K. (2023). Dynamic capabilities for construction organizations in the fourth industrial revolution era. International Journal of Construction Management, 23(5), 855-864.
Ajanni, B. &Addisu, P. (2021). Enhancing financial inclusion in rural Ethiopia through e-banking technologies. International Journal of Marketing & Business Communication, 2(3),36-51.
Albort-Morant, G., Sanchís-Pedregosa, C., & Paredes Paredes, J. R. (2022). Online banking adoption in Spanish cities and towns. Finding differences through TAM application. Economic Research-EkonomskaIstraživanja, 35(1), 854-872.
Al-Dmour, H., Saad, N., Basheer Amin, E., Al-Dmour, R., & Al-Dmour, A. (2023). The influence of the practices of big data analytics applications on bank performance: Filed study. VINE Journal of Information and Knowledge Management Systems, 53(1), 119-141.
Alqudah, O., Jarah, B., Alshehadeh, A., Almatarneh, Z., Soda, M., & Al-Khawaja, H. (2023). Data processing related to the impact of performance expectation, effort expectation, and perceived usefulness on the use of electronic banking services for customers of Jordanian banks. International Journal of Data and Network Science, 7(2), 657-666.
Asiimwe, E. (2019). Effect of mobile banking on the financial performance of commercial banks in Hoima district (Bachelor’s dissertation, Kampala International University, College of Economics and Management).
Aziz, M. R. A., Noor, M. N. M., Sulaiman, S., Harun, M. S., Mustafar, M. Z. I., &Jali, M. Z. (2022). The perception of Malaysian community on the reliability of the adoption ofIslamic digital banking in mobilizing financial sector.Islamic Banking, Accounting and Finance International Conference-The 10th iBAF 2022 (465-472).
Bandiera, O., Prat, A., Hansen, S., &Sadun, R. (2020). CEO behavior and firm performance. Journal of Political Economy, 128 (4), 1325-1369.
Barasa, C. (2021). Effect of electronic banking on the financial performance of commercial banks in Kenya (Masters research project, University of Nairobi).
Basajji, F. (2021). Mobile banking and financial performance of banks in Uganda. Nkumba university press Entebbe.
Bellahcene, M., &Latreche, H. (2023). E-banking adoption by Algerian bank customers: Towards an integrated model. International Journal of E-Services and Mobile Applications (IJESMA), 15(1), 1-20.
Bend, J. D. (2020). Factors affecting electronic banking adoption in Barbados (Doctoral dissertation, Walden University).
Bosco, I. B. (2021). E-Banking and Performance of Financial Institutions in Uganda: A Case of Kabale District (Masters dissertation, Kabale University).
Bousrih, J. (2023). The impact of digitalization on the banking sector: Evidence from fintech countries. Asian Economic and Financial Review, 13(4), 269-278.
DaneshvarKakhki, M., Rea, A., &Deiranlou, M. (2023). Data analytics dynamic capabilities for Triple-A supply chains. Industrial Management & Data Systems, 123(2), 534-555.
Daulay, U. D., Lubis, R., & Gautama, B. (2023). The influence of fintech usage and financial literacy on the performance of MSME with digital marketing as the moderating variable. International Journal of Economics, Business and Accounting Research (IJEBAR), 7(1), 184-194.
Etim, G. S., Ada, J. A., Eyo, I. E., Ndem, S. E., & James, E. E. (2023). Electronic banking and customers’ access to banking services in rural settlements. Resmilitaris, 13(3),1161-1177.
Fairchild, A.J., & Mackinnon, D.P. (2009). A general Model for testing Mediation and Moderation effects. Prevention science, 10(2), 87-99.
Fathy, D., Elsharnouby, M. H., &AbouAish, E. (2021). Fans behave as buyers? Assimilate fan-based and team-based drivers of fan engagement. Journal of Research in Interactive Marketing.
Gabrieli, G., Ng, S., & Esposito, G. (2021). Hacking trust: The presence of faces on automated teller machines (ATMs) affects trustworthiness. Behavioral Sciences, 11(6), 91.
Gbanador, M. A. (2023). Electronic banking systems and the performance of deposit money banks in Nigeria. Nigerian Journal of Management Sciences, 24(1a), 360-371.
Ghaleb, E. A., Dominic, P. D. D., Fati, S. M., Muneer, A., & Ali, R. F. (2021). The assessment of big data adoption readiness with a technology–organization - environment framework: A perspective towards healthcare employees. Sustainability, 13(15), 8379.
Ghose, B., & Maji, S. G. (2022). Internet banking intensity and bank profitability: evidence from emerging Indian economy. Managerial Finance, (ahead-of-print).
Gupta, R. (2023). Industry 4.0 adaption in Indian banking sector - A review and agenda for future research. Vision, 27(1), 24-32.
Hailat, K., Jarah, B., Al-Jarrah, M., &Almatarneh, Z. (2023). The impact of electronic banking services on the use of technology by customers of conventional and Islamic banks in Jordan. International Journal of Data and Network Science, 7(2), 737-744.
Hakizimana, S., Wairimu, M. M. C., & Stephen, M. (2023). Digital banking transformation and performance-Where do we stand?. International Journal of Management Research and Emerging Sciences, 13(1).
Hassan, H. A., Abuga, I. M., &Ndalilah, J. W. (2023). The influence of e-banking on customer satisfaction in Kenya commercial banks.The American Journal of Humanities and Social Sciences Research, 5(5), 88-99.
Hassan, H., &Farmanesh, P. (2022). Customer adoption of self-service technologies in Jordan: Factors influencing the use of Internet banking, mobile banking, and telebanking. Management Science Letters, 12(3), 193-206.
Hennink, M., & Kaiser, B. N. (2021). Sample sizes for saturation in qualitative research: A systematic review of empirical tests. Social Science & Medicine, 114523.
Heredia, J., Castillo-Vergara, M., Geldes, C., Gamarra, F. M. C., Flores, A., & Heredia, W. (2022). How do digital capabilities affect firm performance? The mediating role of technological capabilities in the “new normal”. Journal of Innovation & Knowledge, 7(2), 100171.
Hossain, M. I. (2021). Effects of e-banking adoption on the financial performance of state-owned commercial banks in Bangladesh. Information Resources Management Journal (IRMJ), 34(4), 93-112.
Howard, M. C., & Hair Jr, J. F. (2023). Integrating the Expanded Task-technology Fit Theory and the Technology Acceptance Model: A Multi-wave Empirical Analysis. AIS Transactions on Human-Computer Interaction, 15(1), 83-110.
Hua, Y., Kang, F., Zhang, S., & Li, J. (2023). Impacts of task interdependence and equivocality on ICT adoption in the construction industry: a task-technology fit view. Architectural Engineering and Design Management, 19(1), 92-109.
Ibrahim, S. S. (2022). Customer satisfaction with electronic banking services in the Iraqi banking sector: A case of Duhok city banks. Academic Journal of Nawroz University, 11(3), 12- 19.
Iliyasu, R., &Etikan, I. (2021). Comparison of quota sampling and stratified random sampling. Biom. Biostat. Int. J. Rev, 10, 24-27.
Kanoujiya, J., Singh, K., & Rastogi, S. (2023). Does promoters' ownership reduce the firm's financial distress? Evidence from non-financial firms listed in India. Managerial Finance, 49(4),643-660.
Kimere, V. W. (2022). Effect of electronic banking on financial performance of microfinance institutions in Kenya (Masters research project, University of Nairobi).
Kimiagari, S., &Baei, F. (2022). Promoting e-banking actual usage: mix of technology acceptance model and technology-organization-environment framework. Enterprise Information Systems, 16(8-9), 1894356.
Kitigin, B., Korir, M., &Chepkwony, K. (2021). E-banking technology characteristics and performance of micro and small enterprise in Kenya: A moderated mediation model of adoption and innovative behavior. SEISENSE Journal of Management, 4(1), 13-30.
Kombe, V. (2023). Effects of financial innovations on performance of commercial banks in Kenya. African Journal of Commercial Studies, 2(1), 12-26.
Kothani, C.R., & Garg, G. (2014). Research Methodology, 3rd Ed, New Age International Publishes, New Delhi.
Kumar, H., & Pandey, D. C. (2023). Role of e-banking on banks performance: A quantitative investigation of bank executives. European Economic Letters (EEL), 13(1), 324-328.
Kwon, J., Yu, H., & Ahn, J. (2022). Multidimensional value of customers' mobile service experiences in the food service context. Journal of Hospitality and Tourism Insights, (ahead-of-print).
Leal, G. C., Bandeira, I. D., Correia-Melo, F. S., Telles, M., Mello, R. P., Vieira, F., ... & Quarantini, L. C. (2021). Intravenous arketamine for treatment-resistant depression: Open-label pilot study. European Archives of Psychiatry and Clinical Neuroscience, 271(3), 577-582.
Lee, C. T., & Pan, L. Y. (2023). Smile to pay: predicting continuous usage intention toward contactless payment services in the post-COVID-19 era. International Journal of Bank Marketing, 41(2), 312-332.
Lobe, B., Morgan, D., & Hoffman, K. A. (2020). Qualitative data collection in an era of social distancing. International journal of qualitative methods, 19, 1609406920937875.
Madugba, J., Egbide, B. C., Jossy, D. W., Agburuga, U. T., &Chibunna, O. O. (2021). Effect of electronic banking on financial performance of deposit money banks in Nigeria. Banks and Bank Systems, 16(3), 71-83.
Malhotra, N., Sahadev, S., Leeflang, P. S. H., &Purani, K. (2021). New insights into e-loyalty of internet banking users in an emerging market context: a multilevel analysis. Information Systems Frontiers, 23, 1521-1536.
Malik, S., Chadhar, M., Vatanasakdakul, S., & Chetty, M. (2021). Factors affecting the organizational adoption of blockchain technology: Extending the technology–organization–environment(TOE) framework in the Australian context. Sustainability, 13(16), 9404-9417.
Marchiori, D. M., Rodrigues, R. G., Popadiuk, S., &Mainardes, E. W. (2022). The relationship between human capital, information technology capability, innovativeness and organizational performance: An integrated approach. Technological Forecasting and Social Change, 177, 121526.
Mathina (2022). Basel accord requirements and financial performance of commercial banks in Kenya (Doctoral thesis, Kenyatta University).
Mathina, R., Jagongo, A., &Wamugo, L. (2022). Basel accord requirements and financial performance of commercial banks in Kenya.International Journal of Research in Education Humanities and Commerce, 3(4), 113-128.
Misati, R., Osoro, J., Odongo, M., & Abdul, F. (2022). Does digital financial innovation enhance financial deepening and growth in Kenya?. International Journal of Emerging Markets, (ahead-of-print).
Mosa, R. A. (2022). The influence of e-customer relationship management on customer experience in e-banking service. Soc. Sci, 12, 193-215.
Mtebe, K. (2020). The influence of firm size on Technology Adoption and Firm Performance. Journal of information Systems 16(1), 219-233.
Muchenje, G., &Seppänen, M. (2023). Unpacking task-technology fit to explore the business value of big data analytics. International Journal of Information Management, 69, 102619.
Mugambi, S. W. (2022). Influence of alternate banking channels on customer satisfaction at Kenya Commercial Bank in Nairobi, Kenya (Doctoral dissertation, Africa Nazarene University).
Muller, B. (2017). Electronic banking Challenges in Africa. Journal of Bank Marketing, 2(2), 271-292.
Murugun, D. (2023). Technology Adoption in Indian Banking Sectors–2023. East Asian Journal of Multidisciplinary Research, 2(2), 569-580.
Mutegi, H. K., Njeru, P., &Mwiti, E. (2023). The influence of consular strategy on performance of commercial banks’ diaspora remittances in Kenya. European Journal of Business and Management Research, 8(2), 78-84.
Mutesa, P. (2021). The growth of Electronic banking in Uganda. The influence of Technological advancement. Journal of Business Management, 3(1), 148-162.
Mwachia, J. K., Kimaku, P., &Makungu, M. T. (2023). Influence of organizational agility dimensions on performance of hotel industry in Kenyan coast counties. International Journal of Social Sciences Management and Entrepreneurship (IJSSME), 7(1), 172-187.
Mwakalalile, A. C. (2020). Assessment of Impact of Mobile Banking on Financial Performance: A Case Study: CRDB Bank Plc In Tanzania (Doctoral dissertation, Mzumbe University).
Naeem, M., Ozuem, W., & Ward, P. (2022). Understanding the accessibility of retail mobile banking during the Covid-19 pandemic. International Journal of Retail & Distribution Management.
Nasehifar, V., DehdashtiShahrokh, Z., Mohammadian, M., &Allahverdi, M. (2021). Testing the customer experience management model in E-banking. Journal of Business Management, 13(4), 974-1000.
Ndirangu, E. W., Kiragu, D., Ngunyi, A., Shano, M., & Kimani, J. G. (2022). Effect of online banking on performance of microfinance banking in Kenya.
Ndirangu, E., & Kimani, J. (2022). Effect of mobile banking on performance of microfinance banks in Kenya. European Journal of Business and Strategic Management, 7(3), 24-38.
Ndung’u, N. (2022). Fintech in sub-Saharan Africa (No. wp-2022-101). World Institute for Development Economic Research (UNU-WIDER).
Ng, P. M., Lit, K. K., & Cheung, C. T. (2022). Remote work as a new normal? The technology-organization-environment (TOE) context. Technology in Society, 70, 102022.
Njiru, A. (2020). Mobile money systems in East Africa: Issues and challenges. International Journal of Bank Marketing, 2(2), 167-179.
Njoki, N. M., &Nyamute, W. (2023). Factors affecting financial performance of commercial banks in Kenya. Journal of Finance and Accounting, 7(1), 100-115.
Nwekpa, K. C., Djobissie, I. C., Chukwuma, N. N., &Ezezue, B. O. (2020). Influence of electronic banking on customer satisfaction in a Fidelity Bank Plc in Nigeria. IOSR Journal of Business and Management, 22, 49-58.
Obbo, A. (2022). Electronic banking and financial performance of commercial banks in Uganda (Bachelors dissertation, Busitema University).
Odindo, T. A. (2021). An investigation of management information system agility and performance of commercial banks in Nairobi Metropolitan.EAS Journal of Humanities and Cultural Studies, 3(6), 266-273.
Ofori-Okyere, I., Edghiem, F., &Kumah, S. P. (2023). Marketing inclusive banking services to financially vulnerable consumers: A service design approach. Journal of Services Marketing, 37(2), 232-247.
Ogendo, R. O. (2021). Effect of quality management practices and corporate culture on the operational performance of commercial banks in Nairobi City County (Masters research project, Strathmore University).
Olsson, P. (2020). The Role of Organizational culture in the Technology-firm performance relationship. Journal of Business and Management, 3(2), 162-17.
Oluwafemi, O. O., Yusuf, A. A., &Shuaibu, H. (2022). Impact of internet banking on profitability of Fidelity Bank Plc. International Journal of Management, Social Sciences, Peace and Conflict Studies, 5(2), 385-395.
Olwande, O.S., &Ngaba, D. (2019). E-banking services and financial performance of commercial bank Kenya. International Academic Journal of Economics and Finance, 3(4), 132-153.
Omoto, S. G. (2021). Mobile Banking and Its Effect on the Financial Performance of Commercial Banks: A Case Study of Selected Banks in Narok Town, Kenya (Doctoral dissertation, Maasai Mara University).
Ongaga, H. N. (2022). Effect of financial technology on financial deepening in kenya (Masters dissertation, University of Nairobi).
Onyina, E., Owusu Kwateng, K., &Dzidzah, E. (2022). E-Banking Continuance: An Integration of Network Externalities and Flow Theory. Journal of Information & Knowledge Management, 21(03), 2250035.
Pallant, J. (2020). SPSS survival manual: A step by step guide to data analysis using IBM SPSS.
Pambudi, Widayanti, &Edastama (2021). Trust and Acceptance of E-Banking Technology Effect of Mediation on Customer Relationship Management Performance. ADI Journal on Recent Innovation, 3(1), 87-96.
Pandey, P., & Pandey, M. M. (2021). Research methodology tools and techniques. Bridge Center.
Pradhan, P., Shyam, R., &Dahal, P. (2021). Effect of e-banking on financial inclusion in Nepal. International Journal of Finance, Entrepreneurship & Sustainability (IJFES), 1.
Rahi, S., Mansour, M. M. O., Alharafsheh, M., &Alghizzawi, M. (2021). The post-adoption behavior of internet banking users through the eyes of self-determination theory and expectation confirmation model. Journal of Enterprise Information Management.
Ramos, E., Patrucco, A. S., & Chavez, M. (2023). Dynamic capabilities in the “new normal”: a study of organizational flexibility, integration and agility in the Peruvian coffee supply chain. Supply Chain Management: An International Journal, 28(1), 55-73.
Rasli, S., Aris, A. A. N., & Razak, N. H. A. (2022). Does e-banking services quality affect e- customer loyalty of Islamic banks?. Selangor Business Review, 46-59.
Regin, R., Rajest, S. S., Shynu,T, S., &Steffi,R. (2022). Impact of internet banking on the efficiency of traditional banks. Central Asian Journal of Innovations on Tourism Management and Finance, 3(11), 85-102.
Ritu, H. K., & Pandey, D. C. (2023). Role of e-banking on banks performance: A quantitative investigation of bank executives. European Economic Letters (EEL), 13(1), 324-328.
Roth, T., Stohr, A., Amend, J., Fridgen, G., & Rieger, A. (2023). Blockchain as a driving force for federalism: A theory of cross-organizational task-technology fit. International Journal of Information Management, 68, 102476.
Saetang, W., Tangwannawit, S., &Jensuttiwetchakul, T. (2020). The effect of technology- organization-environment on adoption decision of big data technology in Thailand. Int J ElectrComput, 10(6), 6412.
Shah, S. S. H., Gherghina, Ș. C., Dantas, R. M., Rafaqat, S., Correia, A. B., & Mata, M. N. (2023). The Impact of COVID-19 Pandemic on Islamic and Conventional Banks’ Profitability. Economies, 11(4), 104.
Shahid, A. (2019). The influence of the Dynamic Environment on Technology Adoption, Information Systems Research, 2(3), 199-218.
Shahzad, K., Zhang, Q., Zafar, A. U., Ashfaq, M., & Rehman, S. U. (2023). The role of blockchain-enabled traceability, task technology fit, and user self-efficacy in mobile food delivery applications. Journal of Retailing and Consumer Services, 73, 103331.
Shaikh, A. A., Alamoudi, H., Alharthi, M., &Glavee-Geo, R. (2023). Advances in mobile financial services: a review of the literature and future research directions. International Journal of Bank Marketing, 41(1), 1-33.
Shaikh, I., & Anwar, M. (2023). Digital bank transactions and performance of the Indian banking sector. Applied Economics, 55(8), 839-852.
Sharma, P. (2011). Electronic banking practices I Indian banking industry. Journal of Management, 1(2), 421-436.
Sharma, S. (2023). E-banking services and bank performance: perspective from India. International Journal of Electronic Finance, 12(2), 176-191.
Shin, Y. Z., Lee, Y. G., & Park, M. S. (2023). The use of non-financial performance measures in CEO compensation contracts and stock price crash risk. Asia-Pacific Journal of Accounting & Economics, 30(2), 531-552.
Singh, N. (2023). Impact of e-banking: Prior and after effects on banking activities. Journal of Pharmaceutical Negative Results, 310-317.
Solem, B. A. A., Fredriksen, J. I., &Sørebø, Ø. (2023). Dynamic capabilities in the realisation of omnichannel retailing. Journal of Retail & Distribution Management, 51(1), 21-38.
Ssekamanya, A. (2021). Mobile banking and performance of financial institutions in Uganda. Nkumba university press Entebbe.
Switbert, S., &Baleche, A. (2022). Perceived benefits of E-Banking and its Relationship on Banking Performance in Tanzania. International journal of Engineering, Business and Management, 6 (2).
Tahtamouni, A. (2022). E-banking services and the satisfaction of customers in the Jordanian banks. Journal of Science and Technology Policy Management, (ahead-of-print).
Traore, K., &Loang, O. K. (2023). The factors that influence e-banking service quality in Guinea's commercial banks. International Journal of Accounting, 8(46), 153-167.
Usman, M. (2020). Effect of Mobile Banking on Financial Performance of Deposit Money Banks in Maiduguri Borno State {A Case of United Bank of Africa (Uba) PLC, Maiduguri Main Branch}. Available at SSRN 3612701.
Valdez-Juárez, L. E., & Castillo-Vergara, M. (2020). Technological capabilities, open innovation, and eco-innovation: Dynamic capabilities to increase corporate performance of SMEs. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 8.
Varpio, Uijtdehaage& Young (2020). The distinctions between theory, theoretical framework, and conceptual framework. Academic Medicine, 95(7), 989-994.
Walowe, K. B. (2021). Strategic intelligence and performance of commercial banks in Kenya (Doctoral thesis, Kenyatta University).
Wang, Yang, Chen, Bai, & Yu (2020). Global, regional, and national estimates of target population sizes for covid-19 vaccination: descriptive study. bmj, 371.
Wanjiru, P. W., Mutiso, A. N., & Maina, M. (2022). Internet Banking and Sustainability of Registered Commercial Banks in Kenya.
Yang, Y., & Jiang, Y. (2023). Buyer-supplier CSR alignment and firm performance: A contingency theory perspective. Journal of Business Research, 154, 113340.
Zeleke, S., & Chauhan, S. (2022). The Effect of Electronic banking Service On Customer Satisfaction: Evidence from Commercial Banks of Ethiopia Operating in Hawassa City Administration. Journal of Positive School Psychology, 6(8), 3228-3246.
Zeller, P. (2019). Reliability and Validity issues in Social Sciences. International Journal of BUSS Management, 2(1), 100-119.
Zhu, K., Kroemer, K.L., & Xu, S. (2020). A Cross-County study of Electronic B Adoption Using the Technology-Organization-Environment Framework. International Journal of Computing and Information, 2(1), 167-189.
DOI: http://dx.doi.org/10.61426/sjbcm.v10i2.2635
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.