Effects of Digital Banking on Competitiveness among Commercial Banks in Kenya: A Case of KISII Town

Abstract

Digital banking has become a global concern in recent decades with all financial institutions embracing it as a competitive strategy despite the challenges that comes with it such as lack of security, lack of personalised service, lack of proper legislation governing digital transactions, functionality, dynamism of customer needs and innovation. This study was designed to assess the effects of digital banking on competitiveness among commercial banks in Kisii town in Kenya. The major objective of this study was to determine the effects of digital banking on competitiveness among commercial banks in Kenya. The specific objectives were to determine effects of mobile banking, internet banking and ATMs payment systems on competitiveness among commercial banks in Kenya. The study adopted a descriptive research design that allowed the researcher to collect primary quantitative data through structured questionnaires. The questionnaire with closed Likert-type scale questions was used. A total of 300 staffs from 15 commercial banks in Kisii town were the target population. Stratified sampling was used in selecting the respondents from every bank to be interviewed. Sample size of 90 respondents was calculated using 30% formula from the total population. The Cronbach's alpha reliability statistics was used to test data reliability. The data was analyzed using mean, percentage, weighted mean and chi-square. The tallies from the data collected indicated that digital banking had effects on competitiveness among commercial banks in Kisii. The study concluded that digital banking have attracted and retained so many customers giving the bank a competitive edge within the industry and the market. The study recommended that the use of ATMs was a must provide on the part of banks though the use of same chip for all ATMS cards lessens its competitiveness.  Security was a concern for most customers who fear online fraud and this should be addressed.