Abstract:
ABSTRACT
Increased competition in the banking industry has led to banks adopting new and innovative
strategies to stem competition and increase their commissions. One of the strategies adopted by
banks in Kenya is mobile banking. Despite KCB’s heavy investment in mobile banking as a new
avenue of commission growth, its effects on the commissions whether positive or negative
requires to be ascertained. This study sought to analyze mobile banking transactions contribution
to overall banks’ commissions growth. The study employed profit maximization theory of
economic finance attributed to Marshall A. which was the rational behavior of equilibrium
assumption. A descriptive research design was employed for this study. The study used relevant
secondary data collected from KCB’s financial reports from KCB retail banking head office
finance unit where financial performance records are archived. The data was analyzed using both
gap and regression analysis techniques to determine the change in commissions in relation to
mobile transactions contribution. Through analysis the study established that mobile banking
transaction commissions were increasing steadily for the five year period of study. There was
positive contribution of mobile banking commissions towards the bank’s commission growth.
The study also established that mobile banking balance inquiry contributed 31.0% to total mobile
banking commissions; mobile banking account to mpesa contributed 56.0% to total mobile
banking commissions and; mobile banking bank account to account transfers contributed 8.0% to
total mobile banking commissions. Mobile banking balance inquiry, mobile account to M-pesa
money transfer and mobile bank account to account money transfer had a significant contribution
to the bank’s commissions’ growth. In particular, account to M-pesa was found to contribute a
greater percentage to commissions’ growth. Through regression analysis the three independent
variables of study had positive coefficient: balance inquiry had a coefficient of 1970.14, bank
account to mpesa funds transfer had a coefficient of 1117.15 and bank account to bank account
funds transfer had a coefficient of 925.99. The three independent variables were found to be
significant. Since the findings indicated mobile banking contributed positively to the bank’s
commissions, the study recommends that banks should sensitize their customers on benefits of
usage of mobile banking services to ensure the daily mobile banking transactions increase
gradually.
