Effects of Automation on Performance of Commercial Banks in Kenya: A Case of National Bank of Kenya

Abstract

This research assessed the effects of automation on performance of commercial banks in Kenya with particular reference to National Bank of Kenya. The study begun by determining the automated systems that are being used by the commercial banks. It further proceeded to evaluate the organizational strategic alignment towards automation and concluded by determining the effects of automation on organization performance. The research design that this study employed was descriptive research design. Stratified sampling technique was used to obtain a preferred sample that provided a high representation of the entire population. Data was collected using structured questionnaires which were administered to the obtained sample of 98 National Bank head office employees. Data from the completed questionnaires was coded, edited and entered into IBM SPSS version 22.0 statistical software prior to data clean up, after which, validation tests were carried out to eliminate anomalies. Thereafter, Data analysis was carried out using descriptive statistics using measures of central tendency such as Mean, Median, Mode, Standard Deviation and Variance. In addition, inferential statistics such as regression and correlation were also carried out to determine the relationship between variables. Finally, the results were then presented in form of tables and figures clearly indicating the frequencies and percentages. Results obtained showed that the bank continuously automated its systems as new technologies emerged. Findings showed that the bank automated its core systems such as ATMs, Mobile banking and Internet banking. The bank customers accessed these systems and utilized them to carry out their personal transactions. Findings revealed that the bank’s strategic plans were well aligned towards automation. Technology was considered as an important aspect in the alignment of information systems with business strategy. The organizational structure was noted to have played a role in enabling the bank gain a competitive advantage towards automation of systems and support of effective organization controls. The bank’s organization culture was identified for boosting innovativeness as well as enhancing the commitment amongst staff which increased the success of system automation. Results also showed that Top management provided the strategic vision and direction towards system automation while ensuring that there was cooperation amongst staff and all stakeholders involved in automation. The study concluded that the bank was of the view that by adopting automated systems, both customer service level and customer relationship improved for the better leading to organization performance. The performance of National bank varied across the years as return on assets and return on equity increased and decreased in some years. The study found that there was a strong positive correlation coefficient as shown by correlation factor of 0.816 and regression analysis showed an increase in the 3 variables would result to a positive increase on performance. The study proceeds to conclude that automation enhanced better service quality, provided constant and consistent service availability, led to the elimination of errors and data redundancies and finally, led to time saving due to fast service delivery. System automation opened up a world of opportunities for the customer, gave the bank a better competitive edge in the industry, enhanced customer satisfaction, customer loyalty, and increased revenue due to reduced marginal costs hence, higher profit margins. The study recommended that the bank should continuously automate its systems as new technologies emerge since by adopting automated systems, both customer service level and customer relationship improved for the better. The study recommended that the bank should incorporate and invest in technology since technology was noted as an important aspect in the alignment of information systems with business strategy. The study recommended that the banks should automate all its services since automation enhances service quality, constant and consistent service availability, elimination of errors and data redundancies and time saving due to fast service delivery.