Influence of Bank Innovative Strategies on Financial Performance of Listed Commercial Banks in Kenya

Author(s)

Damaseno Wechuli Khamala , Dr Hesbon Otinga ,

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Volume 9 - July 2020 (07)

Abstract

Evidence from existing literature indicate conflicting relationships between banks innovativeness and banks’ profitability, while other researches merely report on bank innovations without relating the effectiveness of the purported innovations on bank profitability. Therefore, lack of adequate empirical evidence on the relationship between emerging banks’ innovativeness and bank profitability motivated this study to examine the influence of payment innovations, crowd funding, agency banking and artificial intelligence predictive banking system on profitability of listed commercial banks in Kenya. The study was guided by Innovation Diffusion theory.This research adopted explanatory survey research design. This study targeted managers from listed commercial banks headquarters in Nairobi city county, Kenya. The study sample size was determined using Taro Yamane’s proportional sampling technique formula, which was drawn randomly from managers of commercial banks in Nairobi, Kenya. Primary data was collected by means of self-administered questionnaires. Data collected from the field was coded, cleaned, tabulated and analyzed using both descriptive and inferential statistics with the aid of specialized Statistical Package for Social Sciences (SPSS) software and presented using tables to make them reader friendly. Descriptive statistics were used. Data was organized into graphs and tables for easy reference. Further, inferential statistics such as regression and correlation analyses was computed to determine both the nature and the strength of the relationship between the dependent and independent variables. Both descriptive and inferential statistics showed that the study’s independent variable (agency banking) significantly influenced financial performance of listed commercial banks in Kenya. The study concluded that commercial banks that effectively utilize agency banking system attract huge customer’s base, save on transaction costs, thus boost bank’s financial performance. The study recommends that one, commercial banks should roll out feasible agency banking products and services to win customer trust and boost their financial performance.

Keywords

Innovative Strategies, Financial Performance

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