EFFECT OF MOBILE BANKING TECHNOLOGY ON THE FINANCIAL PERFORMANCE OF DEPOSIT-TAKING MICROFINANCE INSTITUTIONS IN KENYA

Jared Mobisa Mosoti, Dr. Joshusa Wafula, Dr. Andrew Nyanga'u

Abstract


The Microfinance institutions in Kenya have experienced turbulent times following the collapse of many banks in the 1990s. In order to minimize their operational costs, these institutions’ banks have adopted internet banking including ATMs, mobile banking, and internet banking where customers can access their accounts on their personal computers. The study’s main objective was; to assess the effect of Mobile Banking Technology on the financial performance of Deposit-taking Microfinance Institutions in Kenya. The study was guided by the conventional theory of financial deepening. The study targeted all Deposit-taking microfinance institutions in Kenya that were in operation between 2016 and 2020. The target population was 387 employees, who include: management and operations, Finance and credit control, Internal and Risk, External Audit, ICT, and Litigation departments of the Twelve Microfinance Institutions that were in operation in Kenya during the period of the study 2016 and 2020. The sample size was 281. The researcher used purposive and stratified Random sampling methods whereby, in a situation where there was only one unit of observation, the entire population was involved in the study. The findings showed that the micro-finance institutions used mobile banking technology in capturing data and that this has reduced incidences of fraud in the banking sector. Further, the findings showed that mobile banking technology played a major role in the microfinance subsector and the use of cyber-crime risk identification mechanisms has reduced incidences of fraud. The study concludes that there is a positive relationship between mobile banking and the financial performance of financial institutions in Kenya. The study recommends that the management of microfinance institutions should review the mobile banking systems continuously to identify loopholes in the system that can be exploited by fraudsters.

Keywords; Mobile banking technology, Financial performance, Microfinance institutions, and Conventional theory

Full Text:

PDF

References


Ala, M. O., & Ngugi, P. K. (2013). Influence of mobile banking on growth of Micro Finance Institutions in Kenya. International Journal of Social Science and Entrepreneurship, 1(2), 1-18.

Alam, S. S., Omar, N. A., Ariffin, A. M., & Hashim, N. M. H. N. (2018). Integrating TPB, TAM and DOI theories: an empirical evidence for the adoption of mobile banking among customers in klang valley, Malaysia. International Journal of Business and Management Science, 8(2), 385-403.

Harelimana J.B (2017), the impact of mobile banking on the financial performance of Unguka microfinance bank ltd, Rwanda Global Journal of management and business 17(4):1

Jenkins, B. (2008). Developing mobile money ecosystems. Washington, DC: International Finance Corporation and Harvard Kennedy School.

Laukkanen, T. (2007). Internet vs mobile banking: comparing customer value perceptions. Business process management journal.

Lee, M. S., McGoldrick, P. J., Keeling, K. A., & Doherty, J. (2003). Using ZMET to explore barriers to the adoption of 3G mobile banking services. International Journal of Retail & Distribution Management, 5(3), 219-232

Mabwai F. (2016), Effects of mobile banking on the financial performance of commercial banks in Kenya. unpublished project of the University of Nairobi

Magiri, G. K. (2002). Relationship between credit models used by microfinance institutions in Kenya and the attainment of outreach (Doctoral dissertation).

Memba and Wanyoro (2017), the effects of m-banking technology on the financial performance of microfinance institutions in Kenya, the Strategic Journal of Business & Change Management. 4(2),1

Mohan, R. (2006). Economic growth, financial deepening and financial inclusion. Reserve Bank of India Bulletin, 1305.

Muiruri, K., Richu, S., & Karanja, G. (2015). Role of Mobile Banking in Enhancing Financial Performance of Micro and Small Enterprises in Kenya: A Case Study of Nakuru Town. International Journal of Economics, Commerce and Management, 3(10), 604–618.

Ogindo, R. O. (2006). An assessment of performance of micro-finance institutions (MFIs) in Kenya (Doctoral dissertation).

Omondi J (2015) mobile banking and financial performance of microfinance institutions in Kenya University of Nairobi repository

Ong’era B. and Omagwa J. (2021), Mobile Banking and Financial Performance of Selected Commercial Banks in Kenya International Research Journal of Business and Strategic management 2(1) 79-94

Pousttchi, K. (2003). Conditions for acceptance and usage of mobile payment procedures.

Ratemo, Z. M. (2004). United States Agency for International Development (USAID) strategy for the development of MFIs in Kenya and the expectations of funded institutions (Doctoral dissertation, University of Nairobi).

Roldós, J. E. (2006). Disintermediation and monetary transmission in Canada.


Refbacks

  • There are currently no refbacks.