Fintech and financial inclusion among households in Kibera slums, Kenya

Abstract

This study investigated the influence of financial technology on financial inclusion among informal households in Kibera slums, Nairobi County. The focus was on three fintech dimensions: mobile banking, digital credit, and digital payments. The specific objectives of the study were: (i) to examine the effect of mobile banking on financial inclusion; (ii) to assess the influence of digital credit on financial inclusion; and (iii) to determine the contribution of digital payments to financial inclusion. The study was guided by Financial Intermediation Theory, Diffusion of Innovations Theory, and Social Capital Theory, which collectively provided a conceptual foundation for understanding how technology-driven financial services can bridge access gaps in marginalized urban settings. A descriptive and explanatory research design was adopted, and data were collected using structured questionnaires administered to a randomly selected sample of 400 households. Out of these, 328 responses were deemed valid and subjected to quantitative analysis. Diagnostic tests confirmed that the regression model met key assumptions, including linearity, normality, homoscedasticity, and absence of multicollinearity. Multiple regression analysis was used to determine the individual and joint effects of the fintech variables on financial inclusion. The results revealed that mobile banking had the strongest positive effect, accounting for 48 percent of the explained variance in financial inclusion (β = 0.693, p = .000). Digital credit showed a moderate but statistically significant contribution, explaining 22 percent of the variance (β = 0.466, p = .000). Digital payments had a weaker yet significant effect, accounting for 6 percent of the variance (β = 0.246, p = .000). The combined model explained 51.2 percent of the variation in financial inclusion (R² = 0.512, F = 113.239, p = .000), confirming that all three fintech dimensions contributed meaningfully to financial access among informal households. The study concluded that mobile banking and digital credit are the most effective fintech tools for promoting financial inclusion in informal settlements. Mobile banking was found to be widely adopted due to its accessibility, affordability, and ability to facilitate savings and transfers without requiring formal banking infrastructure. Digital credit, while impactful, was constrained by limitations in borrower profiling and financial literacy. Digital payments contributed positively but had limited standalone influence, suggesting that their effectiveness depends on integration with other financial services. Based on these findings, the study recommends that policymakers prioritize the expansion of mobile banking infrastructure and enforce regulatory safeguards to ensure responsible digital credit provision. Financial institutions should invest in adaptive credit scoring models that reflect informal income patterns and design user-friendly platforms to accommodate low-literacy populations. Efforts should also be made to increase merchant acceptance of digital payments and integrate them with broader financial products. The study further recommends targeted financial literacy programs to enhance user understanding and responsible usage of fintech services. Finally, the study calls for future research to explore the long-term effects of fintech adoption on financial resilience, savings behavior, and economic mobility. Comparative studies across different regulatory environments and mixed-methods approaches would enrich understanding and inform policy design. The findings contribute to both theory and practice by quantifying the differentiated impact of fintech modalities and offering actionable insights for inclusive financial development.