Effect of Internet Banking Technology on Loan Performance of Deposit-Taking SACCOs in Mombasa County, Kenya

Abstract

Financial institutions are now able to become more efficient while also putting the needs of the client first, thanks to technological advancements in the digital financial sector. By focusing on determining the impact of internet banking technology on loan performance in DT SACCOs in Mombasa County, this study examined the impact of digital financial innovations on the loan performance of DT SACCOs in Mombasa County. The importance of financial innovation adoption by financial services industry participants was highlighted by prior research findings. To identify the research gaps forming the basis for the study, the diffusion of innovation theory, theory, and the literature of such studies was reviewed. A descriptive research design was adopted for the study. The research sample consisted of 70 respondents drawn from the board of management and staff of the six deposit-taking SACCOs in Mombasa County. Of the 70 questionnaires, 63 were completed and returned representing 90% response rate. The findings show that the majority of respondents believe that internet banking technology (mean: 4.18) has a substantial effect on loan performance in DT SACCOs in Mombasa. The results of the regression analysis and hypothesis testing indicate that when digital financial innovations are implemented in the loaning procedures and processes, DT SACCOs' loan performance increases. The study recommends that DT SACCOs should consider internet banking technology, given that the financial sector is moving toward a digital environment if they want to improve the performance of their loan portfolio.