Effects of E-Banking on Growth of Customer Base in Kenyan Banks

Abstract

The study highlights the effects of E-banking services on growth of customer base in Kenyan banks for over the last 5 years and what factors hindered the effective utilization of E-banking service in Kenyan banks and its impact on growth of customer base. This study addressed issues that affected effective utilization of E-banking facilities by customers. The study used three key variables in investigating the problem and those variables include: card system, automated teller machine (ATM) and electronic fund transfer. The study generally investigated how lack of technological know-how, illiteracy, unreliability, and transaction limits has hindered growth of on-line customer base in Kenyan banks. E-banking provides enormous benefits to consumers in terms of time saving and cost of transactions, either through internet, telephone or other electronic delivery channels. For many consumers, electronic banking means 24-hours access to cash through an Automated Teller Machine (ATM) or Direct Deposit of paychecks into checking or savings accounts. But electronic banking now involves many different types of transactions. E-banking is a form of banking where funds are transferred through an exchange of electronic signals between financial institution, rather than exchange of cash, cheque or other negotiable instruments. The research adopted a descriptive research design, a survey of selected Kenyan banks. The study used stratified random sample to ensure equal representation where 135 respondents were selected from the strata/ banks. According to the results obtained in the study e-banking has enhanced the growth of the customer base for the banking institutions in Kenya, through enhancing banking services accessibility to a larger population in the country. Therefore the study recommended the banks should embrace e-banking as a key competitive advantage.

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