Effect of financial innovations on the financial performance of SACCOs in Kenya

Abstract

Financial innovation can be considered to be one of the crucial determinants for the performance of an organization. Various financial institutions have adopted various ways to enhance competition from other financial institutions and enhance their profitability in the market. In Kenya, SACCOS are noted to be the main drivers of the economy. They offer quick services such as quick and flexible loans to individuals seeking finance from micro-institutions rather than commercial banks. This investigated the effect of product and service innovation on the financial performance of SACCOS operating in Kenya. The target population was 10 SACCOS and random sampling was employed during data collection. Primary data was gathered through self-administered questionnaires after a pilot test was conducted to test the validity of the questionnaire. Results revealed that organizations adopted financial innovations to enhance their profitability and enhance competition with other financial institutions in the market. The study drew the conclusion that adoption of financial innovation enhanced the financial performance of the SACCO. The study had one major recommendation which urged SACCOS to adopt mobile banking to increase transactions among clients and crate an online presence to create awareness of the existence of the SACCO.