DIGITAL FINANCIAL INNOVATIONS AND FINANCIAL DEEPENING OF COMMERCIAL BANKS IN NAIROBI CITY COUNTY KENYA
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.
Key Words: Mobile Phone Banking, ATM Banking, Online Banking, Agency Banking
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. http://dx.doi.Org/10.61426/Sjbcm.v11i4.3087
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DOI: http://dx.doi.org/10.61426/sjbcm.v11i4.3087
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