EFFECT OF FINANCIAL TECHNOLOGY ON FINANCIAL PERFORMANCE OF LISTED BANKS IN KENYA.

Abstract

Commercial banks have embraced use of financial technology in their operations. Some of the main goals with the use of financial technology have increased financial performance and operational efficiency. With this fact in light, the research paper focused on establishing how the integration of financial technology by commercial banks helps in increasing their financial performance. This study adopts a descriptive research design in developing a relationship between the study variables. The target population encompassed 43 commercial banks in Kenya but the target sample used in the study is 31 commercial banks. The findings indicate that financial technology has a statistically significant direct relationship with banks financial performance in form of Return on assets. The correlation analysis showed that mobile banking has a strong positive relationship with financial performance(r=0.618). The study also found Internet performance(r=0.720). The findings also indicate that other factors such as capital adequacy and bank size play a part in the influence of of financial performance. All the four factors used in the model accounted for 69.2% of the total observation in the variations on financial performance of commercial banks in Kenya. The remaining 30.8% is explainable by other factors not included in the model adopted by the study. The study recommends that the commercial banks need to focus on increasing the uptake of internet banking and mobile banking in order to increase their financial performance. There are other viable suggestions for further research which include study of the effect of financial technology on the operational efficiency of commercial banks. Further research on other factors that impact the financial performance of commercial banks in other countries should be done to account for the variation in financial performance not explained by financial variables used in this study.