The Effect Of Mobile Banking On Operational Efficiency Of Commercial Banks In Kenya

Abstract

This study's main objective was to determine mobile banking's effect on commercial banks' operational efficiency. The study looked at mobile banking accounts, mobile banking loans, and mobile banking deposits concerning commercial banks' operational efficiency in Kenya. The study was guided by the unified theory of acceptance and use of technology model (UTAUT), technology acceptance model (TAM), and financial deepening theory. The study adopted a descriptive research design targeting 41 commercial banks. The study adopted a census survey using secondary data from Kenya's central bank and the commercial banks' annual financial reports in Kenya. Data on the number of bank deposits mobilized as savings, the number of loans and advances issued by the banks, and the number of registered bank accounts. The study covered nine years from 2010-2018. STATA software was used in data analysis, descriptive and statistical inferential. The independent variables were measured against the dependent variable to examine if they affected commercial banks' operational efficiency. Multiple regression equations estimated the relationship between the variables. Hausman Test was used to specify the adoption of Random effect or Fixed effect models in panel data. The Hausman tested and fixed effect model was selected. The diagnostic tests covering heteroscedasticity, autocorrelation, multicollinearity, and normality tests were also conducted. The findings were presented using graphs and tables. The results were as follows: mobile bank accounts (β=0.0365, p>0.05), mobile loans (β=0.474, p<0.05), and mobile deposits (β=0.015, p>0.05). The study concluded that only mobile banking loans had a significant effect on commercial banks' operational efficiency in Kenya. The study recommended that commercial banks invest more in mobile loans and mobile deposits since the two had a positive relationship with commercial banks' operational efficiency in Kenya. The study results would enhance the adoption of more financial innovation in the banking industry that would contribute to the economy's overall grow.