Determinants of blockchain adoption readiness in Kenyan commercial banks’ remittance systems: the moderating role of bank size

Abstract

Remittances contribute to economic and social development, stimulating growth, enhancing stability, reducing poverty, and facilitating upward mobility for millions of families. They are leading and stable sources of foreign exchange for many countries. As such, remittances are expected to grow in the foreseeable future, especially in low and middle-income countries. However, current remittance systems are plagued by inefficiencies attributed to reliance on traditional methods that suffer from high transaction costs, a lack of transparency, sluggish processing times, and several other complexities. Blockchain technology is presented as a solution to these challenges, offering a faster, cheaper, and more secure way to send and receive money across borders. However, while plenty of research on blockchain exists, there is scant empirical evidence on its integration into banks’ remittance systems. This study aimed to contribute to this field by examining the readiness of Kenya’s commercial banks for blockchain integration into their remittance systems. The study examined these banks’ organisational readiness, technical readiness, and regulatory readiness. The study was grounded in the contingency theory and technology acceptance model, followed positivist research philosophy, and adopted a descriptive cross-sectional research design. 39 commercial banks constituted the units of analysis, whereby a cohort of 156 representatives was targeted. Primary data was collected using structured questionnaires and analysed using descriptive statistic and the PLS-SEM model to establish the relationship between variables. The structural modelling analysis showed that organisational readiness and technical readiness exert a positive and significant influence on blockchain adoption, whereas the effect of regulatory readiness was negligible. Furthermore, firm size had a negative moderating effect on organisational readiness, but its moderation of technical and regulatory readiness was not significant. Therefore, this research advocates for regulatory reforms and the formulation of strategic decisions aimed at driving banks’ technical capabilities and internal environments to drive blockchain integration into remittances.