Determinants of open banking adoption intention among Kenyan commercial banks
| dc.contributor.author | Rutto, Kevin | |
| dc.date.accessioned | 2022-11-07T13:39:13Z | |
| dc.date.available | 2022-11-07T13:39:13Z | |
| dc.date.issued | 2022 | |
| dc.description | A Research dissertation submitted to the Strathmore University Business School in partial fulfillment for the Master of Science in Development Finance of Strathmore University | en_US |
| dc.description.abstract | In Kenya, digital finance has developed at a rapid pace. Notwithstanding, the banking industry still faces a myriad of problems such as information overload on consumers, growing competition from fin-tech & non-traditional players, inefficient manual reconciliation processes, lack of product offering personalization, regulatory compliance inefficiencies, counterparty risks, lack of proper security protocols, lack of financial services that offer single customer view, clearing and settlement time constraints, and poor customer retention. Using Open Banking and Open APIs, banks can innovate by transforming their core systems and integrating their internal systems with external partners to overcome some of these challenges. As a result, the goal of this research was to find out the determinants that will influence the adoption intention of open banking within licensed commercial banks in Kenya. The specific objectives of the study included establishing how perceived risk, perceived value, perceived relative advantage, cost of technology, and how government support affects open banking adoption by Kenyan commercial banks. The main motivators for the study were; the fast-changing competitive environment, globalization, economic paradigm shifts, European Union PSD2 regulation, increased uptake of digitized financial services due to the COVID-19 pandemic, and the demands of financial liberalization within the industry by financial consumers, third-party providers, digital banks and fintech firms. The research focused on all licensed commercial banks within the Kenyan jurisdiction and this informed the unit of study. Thus, respondents comprised of employees from these banks. At least 5 respondents were selected, from the IT department, legal department, finance department, audit department, and operations department. Since the study selected 43 commercial banks this informed a total number of 215 respondents. The study adopted a descriptive cross-sectional survey. Primary data was collected through the use of an online questionnaire which primarily consisted of closed-ended questions. To pretest and validate the study’s questionnaire, a pilot study was performed. Using empirical data from the completed responses and partial least squares-structural equation modeling (PLS-SEM), the study developed a quantitative approach using Smart-PLS version 3.3.3. The main aim of the study was to establish the significance of cost of technology (COT), perceived relative advantage (PRA), perceived value (PCV), and perceived risk (PRSK) towards adoption intention by the commercial banks (UNT) and as well analyze the moderating effect of government support (GS) towards adoption intention of open banking. Results indicated that from the five determinants; cost of technology, perceived relative advantage and perceived value had a positive and statistically significant influence on the adoption intention of open banking among Kenyan commercial banks. On the other hand, perceived risk was revealed to have a negative effect, however with a statistically significant influence on the adoption intention, while government support significantly moderated the relationship between these exogenous variables and the endogenous variable. The study recommends that commercial banks should ensure that there is integration between banks and fintech firms through partnerships and collaborations on this open banking platform which will enable banks to scale up a broad range of user efficient and cost-effective innovations. Moreover, commercial banks should take advantage of this new technology to strengthen their consumer relationships and consumer retention since it has the capability of helping the commercial banks’ consumers manage their finances better rather than simply facilitating transactions. According to the findings, government regulators should ensure that there is a well-defined regulatory approach that is suitable to the specifics of open banking concerning the financial market. Through a well-defined regulatory approach new policies, regulations and initiatives can be made which will promote the adoption of fintech innovations such as open banking that can spur the growth of the financial sector in the country. | en_US |
| dc.identifier.uri | http://hdl.handle.net/11071/12977 | |
| dc.language.iso | en | en_US |
| dc.publisher | Strathmore University | en_US |
| dc.subject | Open banking | en_US |
| dc.subject | Kenyan commercial banks | en_US |
| dc.subject | Cost of technology | en_US |
| dc.title | Determinants of open banking adoption intention among Kenyan commercial banks | en_US |
| dc.type | Thesis | en_US |