Abstract
The study aimed at investigating the impact of digital financial services on the financial performance of Commercial Banks in Kenya using secondary dataset generated from the Central Bank of Kenya (CBK) and the Communication Authority of Kenya (CAK) for a period of five years (2015-2019). To achieve this objective, the study used a multiple regression and Pearson correlations. The study using the Pearson correlations found negative correlations between mobile money (registered mobile money accounts, active mobile money agents and mobile money deposits and withdrawals), digital payments (P2P transfers) and performance of commercial banks. However, the study found positive and significant relationship between customer deposits, Gross non-performing loans and performance of commercial banks in Kenya. The study therefore concludes that digital financial services offered by Fintech companies have a negative impact on the performance of Commercial banks in Kenya and recommends that commercial banks should continuously develop more digital financial services and collaborate more with Fintech companies to improve on their performance. The originality of this study will be of benefit to managers of Commercial banks.
 
 JEL: G21, G23, N27, O30, O31, O39
 
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Highlights
The world is digitizing due to advancement of technology
We investigated the impact of digital financial services on the performance of Commercial banks in Kenyatta University (Kenya)
The study found out the mobile money proxied by mobile money accounts, active mobile money agents and mobile money cash deposits and withdraws had a negative relationship with the performance of Commercial Banks
Summary
The world is digitizing due to advancement of technology. Digitalization through technology can be termed a catalyst to the growth and competitiveness in the financial sector. The financial sector is gradually innovating and transiting to the digital age from fiat currency to digital currency, brick and mortar banking to online and mobile banking, digital payment services and e-finance. These continuous innovations are gradually transforming the financial sector (Palmié et al, 2020). Customers in the current generation are seeking for cheaper, flexible and easy to use financial services. This is challenging the traditional financial institutions as they bid to reach and satisfy their young and more technologically inclined customer base (Koch & Siering, 2017). The increasing demand of digital financial services encourages the traditional financial institutions and non-financial institutions to offer diverse financial products, retain their existing customers and penetrate into the unbanked population (Abbasi & Weigand, 2017)
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