An Evaluation of Online Banking as a Growth Strategy by Commercial Banks in Kenya

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Daystar University, School of Business and Economics


Technology has introduced new ways of delivering banking services to customers especially through the use of Online Banking and Automated Teller Machines (ATMs) herein after, ATMs. Online banking is thus becoming increasingly popular due to the convenience and flexibility it accords to customers. Banks have continued to embrace the use of the internet as a remote delivery channel for banking services and this has had a significant impact on the traditional banking services offered to customers through physical branches. Further, the emergence of online banking as an important channel of distribution for conventional banking products and services has also created challenges for banks attempting to curb competition from other banks. Therefore, for banks to remain competitive there is considerable need to be innovative by adopting the various facets of online banking. This research described the major factors surrounding online banking as growth strategy by commercial banks through analyzing the drivers of online banking service. The purpose of this study was to assess online banking as a growth strategy for commercial banks in Kenya. The research objectives included: determining whether online banking has been successful as a growth strategy for commercial banks; determining the benefits of online banking to customers and the banks; and finding out the challenges faced by commercial banks in the use of online banking. Descriptive research design was used in this study. The population of the study was the product managers of 27 out of 43 commercial banks licensed to operate in Kenya that offer online banking services. The research found that online banking was a growth strategy to most of the banks though to a very small extent. It also found that the major benefits that banks would derive from online banking were; decrease in operational cost of the workforce and subsequent increase in profits to the banks. Based on the findings that were revealed concerning online banking as a growth strategy, several recommendations were made regarding the improvements required to ensure attraction of new customers to the bank and increase usage of the service. Some of the recommendations included the need for banks to engage in more promotions of the online banking service to ensure that customers are fully aware of the benefits and to integrate online banking services with physical branches to fully support other services that online banking cannot provide


Master of Business Administration in Strategic Management


Online Banking, Growth Strategy, Commercial Banks in Kenya


Omolo, A., (2012). An Evaluation of Online Banking as a Growth Strategy by Commercial Banks in Kenya. Daystar University, School of Business and Economics