Effect Of Mobile Phone Banking On Performance Of Commercial Banks In Kenya

Abstract

Globalization is making the financial world more interconnected and organizations are continuously coming up with financial products that are very innovative. The world has also been taken by storm through financial interconnectivity and information technology which has now engulfed data transfer across all spheres putting the command in the hands of individuals through mobile handsets. This has gone to change the way business is done bringing with it speed, efficiency and effectiveness which transmits into economic growth and development. Various initiatives use the mobile phone to provide financial services to those without access to traditional banks everywhere in the world. Mobile banking services give a high potential to expand financial services particularly payment services to the poor. The services also provide a cost effective and convenient way to access bank accounts. The general objective of my study was to investigate the effect of mobile phone banking on performance of Commercial banks in Kenya. The population of my study was the 43 Commercial banks operating in Kenya as at 31st December 2014 with the sample being 10 in number. The sample size was 200 respondents. Descriptive research method was employed. To determine the reliability of the tools employed, the Cronbach’s alpha test was conducted. To determine the linear relationship between all the study variables, Spearman’s Rank Correlation Coefficient was used. Tests to determine violation of OLS assumptions were carried out. Results presented in the regression model summary indicated that the R squared for the regression was 0.458.The ANOVA indicated that F value was 29.532 and was significant at 95% confidence level. Results showed that storage of monies for safe keeping and transfer of monies from one owner to another were not a significant predictor of performance of banks. However, exchange of forms of money through mobile banking and investment of monies had a significant effect on performance of banks. The main recommendations were that apart from KCB and Equity, the other commercial banks in Kenya should come up with products and services similar to CBA’S Mshwari and that local commercial banks in Kenya should diversify their investments before technology pushes them out of business. A future researcher can conduct a research with the aim of determining the effects of mobile payments on other business organizations.