Effect of Internet Banking on Operational Performance of Commercial Banks in Nakuru County, Kenya

Hussein Mohamed Abdullai

doi:10.11648/j.ijefm.20180602.14

Abstract

The purpose of this paper was to investigate the effect of internet banking on operational performance of commercial banks in Nakuru County, Kenya. The study was guided by the research objective: to investigate the effect of internet banking on operational performance of commercial banks in Nakuru County. The study employed the following theories namely: Bank-Focused Theory and The Technology Acceptance Model (TAM). This study adopted a cross-sectional research design. A cross-sectional research design is a research approach in which the researchers investigate the state of affairs in a population at a certain point in time. Very often, the elements in the sample survey are selected at random to make inference about the population as a whole [21]. The study population comprised of 56 employees of the commercial banks. Since the banks are few, the study adopted a census survey. Data was collected using structured questionnaires. A pilot study was conducted in Uasin Gishu County to determine validity of the research instruments where Cronbach’s alpha coefficient (0.7) was employed. Data was analyzed using correlation and regression analysis. The study established that internet banking has a positive significant effect on operational performance of the commercial banks. The study recommends that managements of commercial banks should invest in internet banking as it positively influences operational performance. The study suggests that further studies should be conducted to establish the effect of internet banking on operational performance in other sectors other than banking as the study focused only on commercial banks in order to establish whether internet banking does affect their operational performance.

Highlights

Innovation is considered to be a critical requirement for the growth and profitability of organizations
The objective of the study was to investigate the effect of internet banking on operational performance of commercial banks in Nakuru County
The study concluded that internet banking is highly related with operational performance

Summary

Introduction

Innovation is considered to be a critical requirement for the growth and profitability of organizations. For banking organizations operating in increasingly competitive market, innovation is often a condition for simple survival. Firms need to be flexible to be able to respond rapidly to the fast changing market environment to which they are exposed. To respond to increasingly sophisticated customer and market demand banks need to put in place operational processes that ensure greater customer convenience, better delivery of and increased accessibility to financial services and products [18]. The adoption of electronic banking by deposit money banks have offered increased services to customers with attendant increase in customer risk exposure. The fact remains that the reality of using IT in banks is necessitated by the huge amount of information being handled by these banks on a daily basis. On the customers’ side, cash is withdrawn or deposited, cheques are deposited or cleared, statement of accounts are provided, money

Methods

Results

Conclusion