The Influence of financial innovations on financial inclusion: evidence from regulated non-withdrawable Deposit-Taking Saccos in Nairobi County, Kenya

Abstract

Financial inclusion remains a critical issue in Kenya, with part of the population lacking access to formal financial services, particularly in rural areas and among marginalized groups. Regulated non-WDT SACCOs play a crucial role in bridging this gap by extending financial services to the underserved segments. However, these SACCOs operate in an increasingly competitive financial landscape, facing pressure from banks, microfinance institutions, and fintech providers. To remain relevant, expand their market share, and effectively contribute to the financial inclusion agenda, they must adopt innovative financial solutions and strategies. This study investigated the influence of financial innovations specifically product, process, technological, and marketing innovations on financial inclusion within these SACCOs in Nairobi County in the year 2024. Additionally, it explored the moderating effect of financial regulatory frameworks. Using a positivist research philosophy and a cross-sectional descriptive and correlational research design, data were collected from 112 respondents across regulated non-WDT SACCOs in Nairobi County through structured questionnaires. The findings indicated a strong positive relationship between financial inclusion and both product and marketing innovations, while technological and process innovations showed comparatively weaker associations. Regarding the moderating variable, although regulatory frameworks are generally perceived as supportive, they did not significantly influence the relationship between innovations and financial inclusion within the context of this study. These findings give valuable insights for policymakers, regulators, and SACCO managers, emphasizing the need to balance financial innovations with regulatory requirements. Strengthening financial innovations while ensuring regulatory compliance can enhance financial inclusion, promote economic empowerment, and support sustainable development in Nairobi County and beyond.