EFFECT OF SYSTEM LOCK- IN STRATEGIC POSITIONING ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS OPERATING IN NAROK TOWN

Abstract

In the last decade, there has been a rise in the financial services’ demand. This has been realized through various avenues, including: banks opening agency services in retail trading outlets, mobile phones, automatic teller machines (ATMs), Point-of-Sale (POS) and mobile banking among others. In many countries, banks are employing various strategies to enhance financial inclusion to ensure that their performance is maintained by reaching as many people as possible. This study investigated the effect of system lock -in strategic positioning on financial performance of commercial banks operating in Narok town in Kenya. Specifically, the study sought to: determine the effect of technology adoption, low-cost strategy service features and exclusive distribution channels on financial performance of commercial banks operating in Narok town in Kenya. The study was guided by the systems, efficiency and positioning theories. Further, the study used a cross sectional research design targeting all the commercial banks operating in Narok town. This census approach was purposeful since the ten banks which provided both qualitative and quantitative primary and secondary data which was not only appropriate but also manageable. Data was analyzed using descriptive and inferential statistics; Pearson correlation and multiple regression analysis. Findings from the study revealed that, from the Pearson correlation coefficient; all the four independent variables had a positive and significant relationship with the dependent variable. In addition, the multiple regression analyses indicated that all the independent variables were significant at 5% level of confidence. The study concluded that system lock-in strategic positioning: Technology adoption, low-cost strategy, service features and exclusive distribution channels significantly enhanced financial performance of commercial banks operating in Narok town. The study recommends that Commercial banks that wish to enhance their financial performance should consider lock- in strategic positioning strategy. The study also recommends further studies incorporating other financial institutions and other elements of system lock-in other than the four elements that have been covered in this study.