ALTERNATIVE BANKING CHANNELS AND PERFORMANCE OF COMMERCIAL BANKS IN NAIROBI CITY COUNTY, KENYA
Felix Omweri Motondi - Masters Student, Kenyatta University, Kenya
Hannah Bula (PhD) - School of Business, Kenyatta University, Kenya
ABSTRACT
Commercial banks have employed alternative banking channels to reach out to more clients and lower operational costs. However, these channels have encountered a variety of challenges raising questions on the influence they have on performance. Persistent system downtimes, network failures, transaction errors, security concerns and lack of customer confidence have driven customers into seeking services in bank branches resulting to congested banking halls. The objective of this study therefore was to assess the influence of alternative banking channels on the performance of commercial banks in Nairobi City County, Kenya. The specific objectives of the study were to examine the influence of agency, mobile, internet and ATM banking on performance of commercial banks in Nairobi City County, Kenya. The theories that guided the study were; Bank Led Theory, Innovation diffusion theory, Agency theory, financial intermediation theory and the Resource based theory on performance. This study used descriptive survey research design. 188 respondents from all commercial banks operating in Nairobi City County was the target population of this study out of which a sample size of 94 respondents was selected through simple random sampling. Primary data was collected using a questionnaire. The supervisor helped ascertain validity of the instruments, whereas piloting was conducted to improve on instruments reliability. Quantitative data collected was classified, analyzed and coded. The expected parameters were calculated using the SPSS program as the main statistical tool. Descriptive statistics presented using charts, graphs and frequency percentages were used in measuring the central tendencies such as mean and standard deviation and reporting the data collected from the findings. Qualitative primary data was analyzed via thematic analysis. Apart from the inferential statistics like regression analysis, other forms of analysis such as ANOVA and correlation were used to determine the relationship between the study variables. The study found out that agency, mobile, internet and ATM banking have a positive influence on performance of commercial banks in Nairobi City county, Kenya. The study concluded that; agency banking investments and incomes favorably effect overall performance of banks. Mobile banking alerts assist customers to make informed choices benefitting banks on decreased cost of service delivery and enhanced consumer convenience. The payback duration of internet bank investments is lower than ten years and incomes gained favorably affect bank’s performance. The use of ATMs has replaced labor intensive and paper-based banking methods leading to quicker access to services, convenience. This study recommended that Commercial banks continue offering alternative banking channels for improved efficiency and increased accessibility. The commercial banks need to review and have a variety of products and services available across the alternative banking channels to mirror those offered at branches. The study recommended that Commercial Banks should review the pricing models adopted to enable customers’ access products and service on alternative banking channels affordably. In addition, more security features be adopted to ensure that the system is up to date with most current technology to avoid loss of funds for clients through illegal system accesses.
