Factors influencing the adoption of open banking by employees of commercial banks in Kenya

Abstract

The banking sector is experiencing rapid digital transformation, with open banking emerging as a disruptive technology. Open banking enables third-party financial service providers to access customers’ banking data through Application Programming Interfaces (APIs). While developed nations increasingly embrace open banking, its adoption in Kenya remains limited. Some factors attributed to this limited penetration include an organisation’s readiness, regulatory support or uncertainty, digital literacy, and technological infrastructure. This study explored the factors influencing open banking adoption among employees of Kenya’s commercial banks. Specifically, the study examined how regulatory support, technological infrastructure, digital literacy, and organizational readiness determined open banking adoption. The Technology Acceptance Model (TAM) and the Unified Theory of Acceptance and Use of Technology (UTAUT) models were the frameworks that allowed for an understanding of the study’s variables. Adopting a positivist research philosophy, this study employed a descriptive cross-sectional research design. The researcher then collected data from employees working in Kenya’s licensed commercial banks through structured questionnaires using a five-point Likert scale. The sample size of 387 respondents was determined using Yamane’s formula to ensure diverse representation across the three bank tiers. Descriptive and inferential statistical methods, including multiple linear regression, were used to analyse the relationships between the variables. The findings revealed that technological infrastructure and regulatory support significantly impact employees’ intention to adopt open banking, with organizational readiness influencing adoption moderately. Conversely, digital literacy was found to have a weak influence on bank employees’ intention to adopt open banking. The study concluded that banking institutions should prioritise stronger regulatory frameworks, robust technological infrastructure, and organizational readiness for open banking adoption to succeed in Kenya. These findings provide insights to guide policymakers, commercial banks, and regulators in improving the regulatory and technological environment for open banking to flourish in Kenya. Although the study fulfilled its intended purpose, it was limited as its findings were not generalisable to other regions of Kenya, as the focus was on commercial banks in Nairobi County. Another limitation was that the study only focused on a limited set of variables, including regulatory support, technological infrastructure, organisational readiness, and digital literacy.