Effect Of Digital Technology Adoption On The Performance Of Commercial Banks In Kenya

Abstract

The concept of performance holds a crucial position in the field of management. Exploring the reasons behind why two companies functioning in a similar setting have varying levels of success is a topic of interest, and numerous studies in the management discipline have focused on unraveling this enigma. In the last 10 years (2012-2021), we have witnessed increased adoption of digital technology among commercial banks in Kenya. Among the digital technologies comprise mobile banking, agency banking, internet banking, and blockchain technology among others. As the commercial banks adopt digital technology in their ways of doing business, such crucial issues m-banking services cost, system security, and speed of service and skills requirement need to be investigated with a view of establishing their overall effect on the performance. The aim of this study was to evaluate how the use of digital technology impacts the performance of commercial banks in Kenya. The study has identified specific objectives which include determining the influence of mobile banking, internet banking, agency banking, and blockchain technology on the performance of commercial banks in Kenya. The research focused on three theories - the technology acceptance model, financial intermediation theory, and diffusion of innovation theory. To conduct this study, a descriptive research design was used. The target population for the study was all the 42 banks, with the unit of analysis being head of strategy or operations manager. All 42 banks were encompassed in the research, and a census approach was used, with one respondent who was either the head of strategy or operations manager of each bank participating in the study. Questionnaire was used to collect primary data. A pilot study was conducted to evaluate the reliability and validity of the research questionnaire. Quantitative data was collected. The coded data was analysed using multiple linear regression method. The research discovered a substantial positive association between mobile banking, internet banking, agency banking, and blockchain technology with organizational performance of commercial banks in Kenya. Its regression analysis discovered collective adoption of digital technology accounted for 90.3 percent of the variations in performance of banks in Kenya. The Anova results revealed a p value of 0.000 which was less than the significance level of 0.05 implying that digital technology adoption is critical for organizations to adopt in their efforts to increase their performance levels, according to the result of this research. The study concludes that mobile banking, internet banking, and blockchain technology have positive effects on the organizational performance of commercial banks in Kenya. It is consequently, recommended that commercial banks in Kenya should invest in and promote these technologies to enhance their overall performance, attract and retain customers, streamline processes, and provide enhanced banking experiences.