Technological Banking Innovations and Financial Inclusion by Commercial Banks in Nairobi County, Kenya
Authors: Koori Jeremiah , Wanjiku Njoki Grace , Atheru Gerald 
Published: March 2020

Financial inclusion is the provision of financial services at affordable costs to sections of underprivileged and low-income segments of society. Failure to constantly redesign strategies that help the commercial banks adapt to changing business environment may lead to a strategic mismatch between what they offer and what markets demands.  The study objective was to assess technological banking innovations and financial inclusion by commercial banks in Nairobi County Kenya. The study was anchored on the theory of financial intermediation, diffusion of innovation theory and Silber’s Constraint theory of Innovation. A descriptive research design and a positivism philosophy were used because the conceptual hypotheses were drawn from existing theories and identified knowledge gaps as founded on the research design. Multiple regression model was employed in this study. For the purpose of this investigation, the target population included all the 42 registered commercial banks operating in Nairobi County, Kenya in the year 2016. Purposive sampling technique was used to determine the sample size. Thirteen (13) selected banks that had successfully implemented technological banking innovations in Nairobi County were purposively sampled for the study. Both primary and secondary data was used in this study. Primary data was collected using questionnaires. Secondary data on mobile bank transactions and mobile phone subscriptions in the banks for the period between 2011 and 2016 was obtained from Central Bank of Kenya, Kenya National Bureau of Statistics and the Banking survey manuals. Questionnaires were administered to randomly selected respondents. The confirmatory test for multicollinearity was done using the Variance Inflation Factor. Data was analyzed using correlation, Goodness of Fit, analysis of variance, F statistic/significance of the study variables and regression of coefficients which were used to draw inferences on the relationship between the study variables. Data was presented using tables and figures. Results of the study indicated that the predictor variables; mobile banking, agency banking, electronic banking outlets and internet banking have an influence on financial inclusion. Correlation results also indicated that mobile banking, agency banking, electronic banking outlets and internet banking were positively associated with financial inclusion. Additionally, the regression findings indicated that mobile banking, agency banking and electronic banking outlets were statistically significant predictors of financial inclusion. However, Internet banking had a significance level of 0.586 which is higher than the conventional threshold of 0.05 which rendered the variable as statistically insignificant in prediction of financial inclusion. The findings concluded that mobile banking, agency banking, electronic banking outlets and internet banking have an influence on financial inclusion with the technological innovations being well adopted by the customers in the respective banks .The study recommended that the banks’ management should make use of these research findings to come up with innovative approaches of improving financial inclusion while maintaining the existing ones in the conduct of their business so as reach more clients with their products and services.