The Relationship between Electronic Banking and Financial Performance among Commercial Banks in Kenya

Abstract

Banking industry has been in a process of significant transformation. The force
\nbehind this transformation of the banking industry is innovation in information
\ntechnologies. Information and communication technology is at the centre of this
\nglobal change curve of electronic banking system in Kenya today. It is against this
\nbackground, this study investigated the relationship between e-banking and
\nperformance of Kenya banking system. Specifically, the study established whether
\nthere is relationship between the dependent variable i.e., performance measured by
\nreturn on assets and the independent variables: investments in e-banking, number
\nof ATMS and number of debits cards issued to customers as proxy for e-banking.
\nThe study used secondary data. The data was collected from annual report of
\ntarget banks and Central Bank of Kenya. The study used both descriptive and
\ninferential statistics in analyzing the data. In general the study revealed that
\ne-banking has strong and significance marginal effects on returns on asset in the
\nKenyan banking industry. Thus, there exists positive relationship between
\ne-banking and bank performance. In general conclusion the electronic banking
\nhas made banking transaction to be easier by bringing services closer to its
\ncustomers hence improving banking industry performance.