Integration Strategy and Performance of Commercial Banks in Nairobi City County, Kenya

Abstract

This study’s purpose was to examine whether forward integration strategy has an influence on performance of commercial banks in Nairobi city county Kenya. The study conceptualized forward integration strategy as a synergy of acquiring banking agents, adoption of mobile banking and acquiring new banking outlets. The study was principally anchored on the value chain analysis theory. The study’s target population included 44 accredited commercial banks domiciled and providing services within Nairobi City County. The study’s sample size was 120 heads of departments in the forty-four commercial banks. Primary data was collected using open-ended questionnaires and secondary data was obtained through reviewing online documents such as the annual report from the Central Bank of Kenya. Data was analysed using descriptive statistics and regression analysis. The study revealed that forward integration strategy had an unequivocal and noteworthy influence on commercial bank’s annual revenue, labour turnover, operating efficiencies, market confidence, asset value and productivity. The research study recommends that banks should adopt forward integration strategy through increasing their banking agents and mobile banking penetration. Moreover, banks should also increase their number of banking outlets to tap to the subsequent increased rich customer base and deposits.