The effects of alternative banking channels on profitability of commercial banks- case of the Co-operative bank of Kenya

Abstract

This study sought to establish the effects of alternative banking channels on profitability of commercial banks in Kenya. This research espoused a qualitative research methodology that involved the collection and analysis of statistical data from primary and secondary sources. For purposes of this study, data for a period of four years was analyzed, examined and compared to manifest the rapport between alternative banking channels and profitability of commercial banks. The primary data was sourced from the books of accounts of the Co-operative bank of Kenya and questionnaires distributed to staff, customers and bank agents to justify that the use of alternative banking channels really impacts on profitability of commercial partners. The branches were selected depending on their incorporation of ABCs services in their operation. Out of a population of 120, a sample of 80 was targeted. The branches of cooperative bank of Kenya were unit of analysis whereas the employees, agents and customers of the same bank were used as unit of inquiry. A multi-stage sampling technique was used to identify the branches and respondents of the questionnaires. In the first stage geographical region was identified based on the regions in which branches are demarcated. In the second stage branches which were actively using ABCs were identified while in the last stage branches which had a percentage threshold of 90% and above were selected. The primary data collected through questionnaires were to ensure correctness and consistency before using SPSS statistical tool for analysis and presentation. The study found out that banks should try to make sure that ABCs’ services are designed in the way that customers can easily use them; they are faster which will lead to high subscription rate for previously unbanked segment; banks must also use modern technology in their ABCs services as these will make them user friendly, faster and convenient; Customers should subscribe to ABCs services since they will save them time, money as well as enable them to perform several transactions at their comfort anywhere and at any time. KEY WORDS: Alternative Banking Channels (ABCs), M-Banking, Jumbo link, E-Banking.