Digital Financial Transformation and Financial Inclusion by Mobile Service Providers in West Pokot County, Kenya

Abstract

The primary objective of this study was to investigate the influence of digital financial transformation on financial inclusion within West Pokot County, Kenya. In particular, the research focused on evaluating how digital payment systems, digital credit facilities, digital insurance products, and digital investment products impact financial inclusion within the county. The study was supported by the technology acceptance model, the systems theory of financial inclusion and the diffusion of innovation theory. A descriptive research design was adopted to elucidate the attributes associated with the digital financial transformation contributing to financial inclusion among West Pokot County residents. The target population encompasses 56,000 mobile users within West Pokot County. To create a representative sample, a stratified sampling approach was employed, followed by the application of a simple random sampling technique, resulting in the selection of 384 residents. Structured questionnaires served as the primary data collection instrument, utilizing the drop-and-pick method and email for distribution. Subsequently, the collected data underwent analysis employing both descriptive and inferential statistics, facilitated by SPSS Version 25.0. The study findings show that there is a positive and statistically significant correlation between financial inclusion and various digital financial services, namely digital payment systems, digital credit facilities, digital insurance products, and digital investment products. Further, regression analysis results show that digital payment systems, digital credit facilities, digital insurance products, and digital investment products demonstrate statistically significant positive relationships with financial inclusion. These findings emphasize the importance of digital financial services in promoting greater financial inclusion in West Pokot County. The study recommends that efforts should continue to promote and expand the use of digital financial transformation products, given the overwhelmingly positive attitudes and the perceived benefits of convenience and improved financial access. Mobile service providers and relevant stakeholders should prioritize the development and accessibility of user-friendly digital payment, digital credit, digital investment, and digital insurance solutions. Additionally, policymakers should consider regulatory frameworks that promote responsible and inclusive lending through digital channels.