EFFECT OF ELECTRONIC BANKING ON FINANCIAL PERFORMANCE IN KENYAN COMMERCIAL BANKS: CASE OF EQUITY BANK IN ITS NAIROBI CENTRAL BUSINESS DISTRICT BRANCHES, KENYA
Michael Ngugi Njoroge - Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Fred Mugambi (PhD) - Lecturer, School of Business, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
This study investigated the effect of electronic-banking on financial performance in Kenya commercial banks using a case study of Equity Bank Limited in its Nairobi Central Business District branches. To achieve the objective of the study, a descriptive survey design was used. A sample size of 100 respondents (staffs) of Equity Bank Limited branches in Nairobi central district was selected. The study used primary data, which was collected by a semi-structured questionnaire. Data was analyzed using descriptive statistics and regression analysis. The study found that mobile banking make basic financial services more accessible, reduces the bank’s own overheads and transaction- related costs and presents an opportunity for financial institutions to extend banking services to new customers thereby increasing their market. Further, the study established that customers in Equity bank prefer mobile banking because of its convenience, cheap charges on mobile transaction and its lack of geographical limitation to customers. The study revealed that most users of ATM machines have encountered the problem of Scam and also faceless crooks steal from the accounts of hundreds of bank customers via the ATM technology. It was revealed that taking all other independent variables at zero, a unit increase in debit cards leads to an increase in the Bank performance in Kenya. Further the study established that Increase in debit card usage enhances the profitability of banking industry in form of ROA and increased usage of debit cards has significantly reduced transaction costs and enhanced convenience among credit and debit card users. Moreover, the results revealed that an increase in Internet banking products increases the financial performance of the commercial banks. The study recommended that the banking industry should adjust to full and effective deployment of information technology due to its sophistication since the technology is irreversible with relative perceived advantage.
