STRATEGIC TECHNOLOGICAL INNOVATIONS AND PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Abstract

The purpose of the study was to investigate the strategic technological innovations and performance of commercial banks in Kenya. The study specific objectives include self-service technique, bank digital card, back office automation process and point of sale terminals. The study was anchored on Schumpeter theory of innovation, task-technology fit theory and transaction cost innovation theory. The study unit of observation was Tier one commercial banks in Kenya. The study unit of analysis was the management employees of the 9 Tier 1 commercial banks in the Head Quarters. Stratified random sampling technique was used to select a sample size of 74 participants by help of Yamane statistical formula. Primary data was collected using structured questionnaire based on the objectives of the study. The collected data was edited, coded for processing using the Statistical Package for Social Sciences (SPSS v.25) and results were presented in frequency tables. Descriptive and inferential statistics were used to analyze information generated from the respondents.  On regression results, the study adopted multiple linear regression model to regress performance of commercial banks in Kenya against strategic technological innovations. Based on correlation coefficient index it was revealed that performance of commercial banks in Kenya had a positive significant correlation with strategic technological innovations constructs. Consequently, ANOVA was used to measure the regression model validity and indicated that the model was valid to measure the relationship between the study variables with p<0.05. The coefficient of determination (r²) results revealed that strategic technological innovations had a significant and positive effect on performance of commercial banks in Kenya. The study concluded that the customer care has been automated and customers can self-serve themselves. This has been made possible by deploying chat bots which were able to virtually attend to customers’ queries. The study recommended that the commercial banks should ensure security with digital cards so as to safe guard customers from fraud. This could be achieved through encrypting the bank customer data. The banks digital cards should be dynamic in that card holders can use any digital point of any other bank to transact. This would increase the volume of transactions by the customers. In addition, the banks should design incentive programs geared towards stimulating customers to transition to digital cards. They would lead to increased transaction fees revenue.

Key Words: Self-Service Technique, Digital Card, Back Office Automation Process, Point Of Sale Terminals

CITATION: Mbuthia, P. M.,  & Datche, E. A. (2023). Strategic technological innovations and performance of commercial banks in Kenya. The Strategic Journal of Business & Change Management, 10 (2), 1055 – 1068.