Mobile banking and competitive advantage of Commercial banks in Kenya

Abstract

The adoption of mobile banking has progressively become possible due to advancements in telecommunication technology in the banking industry. In response, banks have actively implemented strategies to ensure their sustainability and growth in this highly competitive sector. Mobile banking not only helped banks retain their existing customers but also allowed them to introduce new products and services, enhancing their competitiveness. This technology offered convenience and efficiency, making it crucial for banks to add value and maintain a competitive edge. This study aimed to investigate the effect of mobile banking as a competitive advantage tool for commercial banks in Kenya, with a specific focus on the impact of retail payments, mobile banking loans, and mobile bank transfers on their competitive positioning. The Hypothesis tested was mobile banking transfers, mobile retail payments, and mobile loans have no significant effect on competitive advantage of commercial banks in Kenya. The research incorporated various theories, including Diffusion of Innovation Theory, Reinforcement Learning, and Efficiency Structure Theory, to explain how mobile banking contributed to increased profits and improved customer experiences, thereby bolstering competitiveness. The research employed a descriptive research design and focused on two commercial banks, Equity and KCB, along with their personal banking clients in Kenya as the study population. Probability sampling was used, with a sample size of 400 personal banking clients. Secondary data for this study was obtained from the audited and published financial statements of the selected banks. Primary data, on the other hand, was collected through a questionnaire that consisted of both open-ended and closed-ended questions. The questionnaire aimed to gather information on the impact of mobile banking on the competitive advantage of commercial banks, with a specific focus on how it enhances the customer experience and drives growth. The data analysis process employed various descriptive techniques, including the use of tables, pie charts, bar graphs, and frequency distribution tables. Measures of central tendency and dispersion, such as the mean and standard deviation, were also calculated to provide a comprehensive analysis of the data. These methods allowed for a clear presentation and interpretation of the findings related to the study's objectives. The study assessed the relationship between dependent and independent variables using both univariate and multivariate regression equations. Mobile bank transfers played a crucial role in helping commercial banks gain a competitive advantage. Key factors that contributed to this advantage included the convenience, availability, and affordability of banking products offered through mobile channels. Additionally, well-defined mobile money transfer mechanisms and structures assisted in generating competitive advantages for commercial banks. It was essential for commercial banks to continually invest in technology to improve their operational processes and service delivery. This included developing strategies that focused on reducing production costs to achieve a meaningful competitive advantage. Overall, commercial banks prioritized enhancing mobile banking services, including mobile bank transfers, mobile retail payments, and mobile loans, to remain competitive in the industry.