Effects of Adoption of Technology on Performance of Deposit Taking Sacco’s: A Case of K-Unity Sacco, Kiambu County

Abstract

The study sought to establish the effect of adoption of technology on performance of Deposit Taking Saccos with reference to K-Unity Sacco. To fulfil this purpose, the study addressed three research objectives; to establish the effect of mobile banking on performance of Deposit Taking Saccos in Kenya, to determine the effect of loan management system on performance of Deposit Taking Saccos in Kenya and finally, to assess the effect of digitization of operations on performance of Deposit Taking Saccos in Kenya. Descriptive research design was adopted using quantitative and qualitative approach to data collection, analysis and reporting. Using census sampling, the study was based on a census of 95 employees at K-Unity Sacco as at 31st January 2019. A structured questionnaire administered to all the staff was used to collect primary data. Additionally, secondary data covering three years on performance (return on equity and return on assets) of Deposit-Taking SACCOs was· collected. Descriptive statistics were utilized in providing simple summaries about the sample and measures. While simple linear regression models were applied on the quantitative data to generate coefficients and their corresponding t-statistics and p-values used to test hypotheses, qualitative data from the questionnaires was analyzed using content analysis. The research findings regarding the first objective revealed that the relationship between mobile banking and financial performance was positive and statistically significant. Findings about the second research objective indicated the correlation between loan management system and financial performance was positive, moderately weak but statistically significant. Whereas, the regression coefficient for adopting loan management system was statistically significant. Lastly, the correlation between digitization of Sacco operations and financial performance was found to be positive, relatively strong but statistically significant. The regression coefficient for digitization of Sacco operations was also statistically significant. The study concluded that the utilization of mobile communication services particularly mobile messaging, mobile call and mobile chatting services by Deposit-Taking SACCOs enhances their performance. The study further concludes that loan management system had enhanced capabilities of the borrower in ensuring effective loan management and creating a positive customer experience. The system also allowed Sacco staff members to have a better overview over customer structure, loan- and savings portfolios. Lastly, the study concludes that full automation of Sacco activities can play a significant turnaround role for Saccos in terms of cost reduction, improved customer experience, credit risk mitigation, transparency and strengthened confidence among stakeholders in the vital Sacco industry. On the first objective, it is recommended that Deposit Taking Saccos should go beyond mobile banking and appreciate the role of Internet banking which can enable their customers to conduct financial transactions through the Sacco’s website on the Internet. On the second objective, the study recommends the need for the Deposit Taking Saccos to invest in technological advancement by equipping their staff with technical skills and also providing them with the necessary facilities. On the third objective, the study recommends that DTS should adapt the cloud loan management systems to further improve the quality of their working and bring in a new dimension in the financial sector. Urgently, there is need to strengthen the security capabilities of these system to ensure maximum protection from vulnerable attacks.