Market growth strategies and financial performance of commercial Banks in Kenya

Abstract

Growth strategies constitute plans that organizations develop to expand their business in specific aspects such as revenue, market share, customer base, or product offerings. Notably, the competitive environment within the market has resulted in financial institutions scaling back their operations. This study was guided by four objectives: to establish the effect of market penetration on the performance of commercial banks in Kenya, specifically NCBA Bank; to determine the effect of market development on the performance of commercial banks in Kenya, focusing on NCBA Bank; to establish the effect of product development on the performance of commercial banks in Kenya, with a case study of NCBA Bank; and to determine the effect of market diversification on the performance of commercial banks in Kenya, again with NCBA Bank as the case study. The study adopted a descriptive research design with the aim of identifying the study phenomenon under investigation, specifying the research questions, defining sources and types of data, and clarifying how data was analyzed and interpreted to answer the research questions. The research was conducted at NCBA Bank, based in Nairobi and Upper Hill offices. The target population consisted of 207 employees at NCBA Bank’s head office. The researcher adopted a random stratified sampling technique, focusing on the target population. Primary data collection involved the administration of research questionnaires. A pilot study was conducted with 13 individuals from NCBA Bank Limited who were not included in the final data collection process. Reliability of the study was assessed to ensure consistent findings, while validity was established to confirm the accuracy of the research instruments. Data analysis was performed using SPSS version 25 and presented in the form of charts, graphs, and pie charts. The study reported a moderately significant positive correlation between market penetration on financial performance, 𝑟(261) = .41, 𝑝 < .001. The findings suggested that enhanced market penetration methods like agency banking and digital financial services significantly boost financial performance. Moderately significant positive correlation between market development and financial performance, 𝑟(261) = .42, 𝑝 < .001. The finding implied that the adoption of financial innovations such as mobile banking, internet banking, and agency banking has positively impacted the performance of commercial banks. The computed Pearson Correlation results as shown in Table 4.9 further revealed a strong significant positive correlation between product development and financial performance of commercial banks, 𝑟(261) = .62, 𝑝 < .001. There is a strong significant positive correlation between market diversification and the financial performance of commercial banks in Kenya, 𝑟(261) = .65, 𝑝 < .001. This study concludes that both marketing innovation, product diversification innovation, and product innovation and market diversification strategies are integral to the success in the performance of commercial banks. The study was recommended to the policymakers, practice and areas for further research.