The Effect of Mobile Banking On the Competitive Advantage of Commercial Banks in Kenya

Abstract

This Research aimed to establish and explain the relationship between mobile banking and the competitive advantage of commercial banks in Kenya. The purpose of the study was to establish how mobile banking technology has led to competitive advantage in the Kenyan banking industry with the main research questions in the study being how mobile CRM innovation has influenced the competitive advantage of commercial banks; the influence of mobile marketing innovation on commercial banks’ competitive advantage and the most vital one being; the influence of mobile financial transactions innovation on commercial banks’ competitive advantage in Kenya.Reviewed literature demonstrated that mobile banking is cost effective way to provide banking services to the unbanked. The growth of mobile phone technology in Kenya has led to the introduction of mobile banking services by commercial banks in Kenya. The two theoretical concepts addressed are mobile banking and competitive advantage. The aim was on the one hand to offer a comprehensive view of the field while also to present a model that would help guide the analysis process and infer competitive advantage towards mobile banking. Following the outcome of the literature review, the research went on to find out the empirical evidence to support or refute the results of the literature review.The researcher utilised the descriptive study design in a bid to aid in the explanation of phenomena or characteristics associated with the subject population who in this case were the 31 commercial banks. The research therefore took a deductive approach where primary data was collected through the use of questionnaires distributed to selected bank employees. 93 questionnaires were issued as shown in the sample frame. The research was conducted during the months of March to April 2015, the analysis of both the quantitative and qualitative data was done using computer software, and the final research document was submitted as per the set dates. The empirical evidence revealed that there are currently a wide range of mobile banking services offered by commercial banks in Kenya to ensure that they remain competitive and relevant in the market. These services are deemed easy to use and convenient providing ‘anywhere’ ‘anytime’ banking services to the customers, hence enhancing customer satisfaction. Commercial banks have also been able to market their products and run campaigns to attract new customers using the mobile banking platform.It was also revealed that majority of the banks in Kenya are currently offering mobile banking services to ensure that they remain competitive and also to share in the benefits of mobile banking. Most of the respondents were of the opinion that mobile customer relationship management innovation has led to an increase in customer satisfaction as well as contributed to both customer loyalty and customer retention. On the other hand, banks have embraced mobile marketing innovation as a platform to boost advertising and enhance their brand value. Banks have also initiated robust account operations that have significantly influenced payment of services. From the study, it can be concluded that mobile CRM innovation is typically an opt-in only channel which allows for high and quality responsiveness. In order to reach a vast majority of customers, banks have also come up with mobile marketing innovation as an interactive platform with the customers. For banks to remain relevant in the market, they have ensured that they offer a variety of mobile banking services ranging from funds transfers to bill payments. The study recommended that banks adopt and implement a continuous improvement strategy to win customers. They also need to deliver products and services that are highly differentiated. Policy makers need also to put into consideration mobile banking awareness creation when drafting policies on the operations of banks in Kenya in order to overcome the challenges faced. The study also recommended that managers keep a keen eye on the developments of mobile banking as it is a new platform for competition among commercial banks as the world moves into a digital age to ensure that the bank remains relevant in the market.