Influence of Strategic Responses during Covid-19 on Performance of Selected Tier I Commercial Banks in Kenya

Abstract

The general objective of the study was to determine the influence of strategic responses during COVID-19 on performance of commercial banks in Nairobi Central Business District. The study was guided by the following research objectives: to determine the effect of technology innovation during COVID-19 on performance of selected Tier I commercial banks in Nairobi County, Kenya. To examine the effect of human capital during COVID- 19 on performance of selected Tier I commercial banks in Nairobi County, Kenya and to investigate challenges faced during COVID-19 and their effect on performance of selected Tier I commercial banks in Nairobi County, Kenya. The research employed a descriptive survey design methodology. The target population for this study was 7401 employees working at selected Tier I commercial banks in Kenya (NCBA Bank, Equity Bank and Stanbic Bank). Stratified random sampling technique was utilized to choose a group of 138 employees. Primary data was collected via questionnaires. Data analysis was conducted using the Statistical Package for the Social Sciences (SPSS). Pearson correlation was employed to assess the relationship between the variables being investigated. Results were interpreted using descriptive statistics such as mean, mode, variance and standard deviation. Results were presented using tables and figures. The findings on the effect of technology innovation during COVID-19 on performance showed that respondents agreed that there was an increase use of digital banking due to COVID pandemic. During COVID-19 mobile money transfers increased. Bank regularly conducted a check-up on ATM machines so as to avoid network and machine break down. It was also surveillance cameras and security guards were located in all our ATMs so as to increase security. The findings showed that respondents could not reach an agreement on bank performance increased during COVID-19 due to the use of E-banking. The study also showed that r=.731**p<0.000. This indicates that there was a positive and significant relationship between technological innovation and performance. The findings on effect of human capital during COVID-19 on performance it was revealed that respondents agreed that a lot of employees were required to work from home due to COVID-19 outbreak. Working from home created flexible work schedule and employees were gives required equipment’s. During COVID-19 job enlargement strategy was used. The findings also revealed that there was a disagreement on during COVID-19 the organization trained employees to increase knowledge and skills on how to perform their duties. Working from home increased employee productivity and employees were laid off. There was disagreement on employees participate during downsizing decision making. Bank clearly communicated to employees before reducing their salary. It was also revealed that respondent strongly disagree that during COVID-19 employee’s salary was reduced. The study also showed that (r=0.734**, p<0.000. This indicate that there was a positive and significant relationship between human capital and performance. The findings on effect of credit monitoring policy during COVID-19 and its effect on performance it was established that respondents agreed that banks had effective credit monitoring and appraisal procedures in place. Loan default rate increased during COVID- 19. Bank implemented credit management policies and procedures to deal with bad loans. The study also revealed that respondents could not reach an agreement on there was a decrease in assets and earnings in the bank due to COVID-19. Delinquent debts were written off. Banks financial performance decreased. There banks experienced a decrease in value of assets and capital adequacy ratios. It was revealed that (r=0.659**p<0.000). This shows that there was a positive and significant relationship between challenges during COVID-19 and performance. In conclusion, during COVID-19 financial institutions increased the use of digital banking thus, increase accessibility, increase mobile money transfer, create convenience, offer customers products and services online. Employees were not laid off and employees salary was not reduced. However, a lot of employees in were required to work from home which in return created flexible work schedule and employees were provided with required equipment’s to conduct their duties Loan default rate increased during COVID-19, bank experienced an increase in non- performing loans and number of people given bank loans reduced. It was recommended that there is a need for financial institutions to continue creating awareness among especially in rural areas on how to use M-banking services. To increase employee’s productivity while working from home, managers are encouraged to clearly communicate employee’s expectation regarding their work, develop clear work hours, and have regulate meeting with employees to check their productivity. Effective strategies should be developed to reduce loan default. Due to lack of studies done it is recommended that a similar study should be done in other organization.