Generic Benchmarking and Performance of Commercial Banks in Bungoma County, Kenya

Abstract

The past recent years have seen changes in the Kenyan economy and commercial banks have not been spared from the impact of these changes which includes: interest rate capping; increasing competition from financial technology companies and increased Consumer expectations as well as political interference. These challenges possess financial pressure to the bank hence losses and create risk to Kenya's financial stability if allowed to persist in the long term. Majority of commercial banks have experienced decline in return on equity for the period 2014 to 2017. Management theories and practice suggest comparison (benchmarking) as the key tool for evaluating and improving organization performance and therefore minimize risk. This study therefore sought to investigate the influence of generic benchmarking on the performance of commercial banks in Bungoma County. The study used descriptive survey design. The target population was 133 which was the total number of managers in Bungoma County commercial banks. This used census approach, as it utilised the entire population in the research. To ascertain the reliability of the instruments, a pilot study was done in Nakuru County. Quantitative data collected using questionnaires was analysed by the use of descriptive statistics and inferential analysis using SPSS (Version 24) and presented through percentages, means, standard deviations and frequencies, percentages and correlation analysis. Tables and figures were used to present data. The findings indicated that there was an effective ICT system adoption in the majority of the commercial Banks and that ICT adoption affected commercial banks performance. Majority of the commercial banks had improved their market share as a result of ICT adoption. The relationship between generic benchmarking and performance of commercial bank was found to be positive and significant. They should aim at attracting customers, satisfying customers and retaining customers through strategic alliances. The study recommended that commercial banks should ensure that there is effective use of up to date ICT system to enhance performance of commercial banks.