Influence of Innovative Banking on Financial Inclusion among Savings and Credit Cooperative Societies in Homa-Bay County, Kenya

Abstract

Recent changes in finance have affected the global economy significantly; banks worldwide have implemented changes involving new and advanced financial technology to ensure their longevity. Technologically progressive regions exhibit an adjusted banking industry that meets its shareholders' expectations, while survival depends on adaptation and change within the local Kenyan banking industry. Technological progress and economic alterations have been a major cause of this transformation. Moreover, innovation in service delivery is on the rise among Kenyan banks. Most people use ATMs for transactions, followed by Internet banking, while EFTs and POS devices are also popularly used in addition to mobile banking. The researcher analyzed how innovative banking influences financial inclusion in savings and credit cooperative societies within Homa-Bay County. The study evaluated how access to innovative banking such as Internet, mobile, agency and ATM banking influences Savings and Credit Cooperative Societies in Homa-Bay County. The study was anchored upon three theories: the agency theory, the stakeholder theory, and the financial intermediation theory. The researcher used a descriptive research design and collected data from two managers and two insubordinate employees of the 44 SACCOs operating in Homa-Bay County. The total number of respondents for the study was 122. The data was collected using the questionnaires, and the SPSS software was used for data analysis. Graphs and tables were used to present the analyzed data and findings. This led to relevant policy recommendations based on the conclusions drawn from the findings of this study. Future investigations will likely focus on identifying areas requiring further examination. The study found that mobile banking, agency and ATM banking positively and significantly influence financial inclusion. However, internet banking does not statistically influence financial inclusion in the study area. The overall regression model of the study shows that innovative banking practices formed a good predictor of financial inclusion by 85.8% at a 5% significance level. The research recommends that SACCOs adopt innovative banking practices to improve financial inclusion in rural areas.