EFFECT OF ALTERNATIVE BANKING CHANNELS ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Abstract

The aim of the research was to establish effect of alternative banking channels on performance of commercial banks in Kenya. In an exertion to grasp the unbanked persons as well as fiscal establishments outreach on alternate banking channels, an insurgency in a variety of imbursement clarifications has been observed. The research espoused a descriptive study designs because it provided a clear outcome and the characteristics associated with it at a particular point in a period. The study applied both primary as well as secondary data. The study used five year (2015-2019) data for analysis. Analysis was done with the help of statistical package for social sciences (SPSS) version 21 and Microsoft excel 2016. Means and standard deviations were the descriptive statistics used to analyze the trend of mobile banking, ATMS banking, agency banking and internet banking. Regression analysis was used find out the effect of alternative banking channels on the financial performance of commercial banks in Kenya. Analysis of variance (ANOVA) was used to test the goodness of fit of the regression model to the data collected. The study indicated that there is a strong relationship between alternative banking channels and financial performance of commercial banks in Kenya. This study also established that 14.1% of the total variance in the financial performance of commercial banks in Kenya can be attributed to alternative banking channels. The remaining 85.9 % of the variance in financial performance can be attributed to other determinants of financial performance which were not the subject of this study. ANOVA statistics revealed that the regression model was ideal since it had a significance level of 0.0%. The study further established that mobile banking, ATMs banking, agency banking and internet banking affects financial performance of the commercial banks positively and in a statistically significant way. The study established that mobile banking, ATMS banking, agency banking and internet banking affects financial performance of commercial banks positively. As a result, the study made the following recommendations for policy change: that commercial banks in Kenya should invest heavily in alternative banking channels such as mobile banking, ATMS banking, agency banking and internet banking as this will lead to improvement in the financial performance of the commercial and that the Kenyan Government through the Central bank should come up with policies that create a conducive environment for commercial banks to operate in since it will translate to economic growth of the country. Key Words: Mobile Banking, Agency Banking, Internet Banking, Automated Teller Machine CITATION: Awendo, N. O., & Mwanzia, S. (2022). Effect of alternative banking channels on financial performance of commercial banks in Kenya. The Strategic Journal of Business & Change Management, 9 (4), 403 - 418.