RELATIONSHIP BETWEEN BANKING TECHNOLOGIES AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

The study sought to determine the relationship between E-Banking technologies and financial performance of commercial banks in Kenya. The specific research objectives were to assess the influence of ATMs on the financial performance of commercial banks in Kenya, to establish the effect of debit and credit cards on the financial performance of commercial banks in Kenya, to determine the effect of mobile banking on the financial performance of commercial banks in Kenya and to assess the effect of internet banking on the financial performance of commercial banks in Kenya. The study was based on Technology acceptance model (TAM), diffusion of innovations theory and resource based theory. The study population included all 44 commercial banks licensed by Central Bank of Kenya. Secondary data for a five year period was collected from financial statements of commercial banks in line with the specific variables of this study. Descriptive statistics (weighted means, standard deviation) was used to summarize the data using SPSS 21. Pearson moment correlation was conducted to establish the linear relationship between study variables. Regression analysis was conducted to establish the nature of the relationship. The study revealed that recent ATM innovations offer financial institutions the opportunity to transform the ATM from a cash dispenser to a customer relationship management tool, helping to enhance loyalty among all customers. Credit cards are being adopted by the banks so as to increase income, and to reduce credit and liquidity risks. Mobile banking is likely to have major impacts on the profitability of commercial banks as business operations get smoothen and that internet banking offers the convenience of conducting most of the banking transactions at a time that suits the customer. The study concludes that adoption of E-Banking technologies had a positive influence on the performance of commercial banks in Kenya. The study recommend that commercial banks should continue investing in ICT.