ENTREPRENEURIAL BANKING INNOVATIONS AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN NAIROBI CITY COUNTY, KENYA

Margaret Ngari, Dr. Susan Naikuru, Dr. Peter Ngatia

Abstract


Innovation has become an increasingly important part of banking. In Kenya, commercial banks have been quick to adopt new strategic innovations, with most now offering online and mobile banking services. The Central Bank of Kenya 2022 report indicated that the total transactions aided by mobile banking and agency banking had increased by 12.3%. Similar increase in transactions were recorded in previous years among larger banks due to adoption of technology. However, banks have not fully adopted banking innovations such as open banking while some banks face challenges integrating innovations hence, there is need to develop a more entrepreneurial approach to innovations. This study examined entrepreneurial banking innovations and financial performance of commercial banks in Kenya. The study examined how entrepreneurial banking innovations influence financial performance of the banks. Performance was measured using indicators such as profit before tax, number of customers and the net promoter score. The specific objectives were how mobile banking and e-banking influence financial performance of the banks. The study used a descriptive design with questionnaire as the instrument for data collection. Reliability of the study instrument was established using Cronbach Alpha, internal consistency method. Validity of the research instrument was determined using content and construct validity. The target population was 39 commercial banks in Kenya. The unit of observation was senior operations managers, product development managers, senior marketing managers and information technology managers from the banks. The study conducted a census on all the banks. Data collected was analyzed using SPSS version 28 to produce frequencies, descriptive and inferential statistics which were used to derive conclusions. The study conducted a multiple regression analysis to determine the relationship between entrepreneurial banking innovations and financial performance of commercial banks. Correlation results revealed that banking innovations influences financial performance of commercial banks in Kenya positively. The results indicated that there was a positive and significant relationship between e-banking and mobile banking and financial performance.

 

Key Words: E-banking, Mobile banking, Entrepreneurial Banking Innovations, Financial Performance of Commercial Banks


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