Strategic Change Management Practices and Performance of Fintech Firms in Kenya

Abstract

The Fintech industry plays an instrumental role in economic growth in the 21st century. However, the industry has experienced a decline in performance as a result of a diverse set of challenges including technological advancements, competition, regulatory compliance and lack of investments. Fintech’s in Africa experienced low growth rates of 42% and 36% in 2021 and 2022 while other regions had over 50% growth rates in this period. This has had an impact on their profitability, market share and their ability to satisfy customers. Implementing strategic change management practices allows Fintech firms to cope and adopt to inevitable changes and challenges in the environment enabling them to grow and remain competitive. Research on strategic change management practices affecting performance with a specific focus on the Fintech industry is limited. The purpose of this study was to determine the effect of strategic change management practices on performance of Fintech firms in Kenya. The objectives included to determine the specific strategic change management practices adopted by Fintech firms, to examine the level of performance and to assess the effect of strategic change management practices on the performance of Fintech firms in Kenya. The study was underpinned by the Burke-Litwin change model, Kotter’s 8 step model, Balanced scorecard and Institutional Theory. The study adopted a descriptive and explanatory research design. The target population of this study was the 35 Fintech firms in the payment’s services segment and involved 105 respondents categorized into top, middle and lower-level managers. Census was used in this study as the target population is small. Data was collected using structured questionnaires which had undergone pretesting. The data collected was analyzed using frequency, mean and standard deviation as well as multiple linear regression and correlation analysis. The data was presented in the form of tables. The findings emphasize the significant role of strategic change management practices leadership, communication, and stakeholder engagement in enhancing performance within Kenya's Fintech industry. With an R² of 0.605, the regression model demonstrates that these practices collectively explain 60.5% of the variance in performance. Stakeholder engagement emerged as the strongest predictor, followed by leadership and communication. Correlation analysis revealed strong positive relationships between these practices and performance. The mean scores for leadership, communication and stakeholder engagement underscore the perceived effectiveness of these practices by respondents. Recommendations focus on strengthening leadership through targeted training, enhancing communication channels for clarity and alignment, and fostering stakeholder engagement through inclusivity and collaboration