Influence of Product Innovation on Performance of Agency Banking in Commercial Banks in Kenya

Abstract

The paper seeks to establish the influence of product innovation on the performance of agency banking in commercial banks in Kenya. The study was informed by the diffusion theory of innovation. The study used a descriptive survey research design. The target population for this study was the 18 commercial banks in Kenya licensed by the Central Bank of Kenya to operate agency banking. The branch managers were the key target respondents in the study. Primary and secondary data were collected using questionnaires and a checklist guide, respectively. Reliability and validity tests were undertaken, and data collected were analyzed using SPSS software. Inferential analysis was carried out to establish the relationship between the independent variables and the dependent variable. The study established that product innovation significantly influenced the performance of agency banking among commercial banks in Kenya. Through the introduction of new products and making improvements to the existing products, and differentiating the products from their peers in the market, better customer attraction was achieved, thus enhancing performance. The study concluded that product innovation is essential in steering the performance of agency banking, thus recommending that the commercial banks, through management, ought to uphold innovation as a way of enhancing the performance of agency banking.