INFLUENCE OF STRATEGIC INFORMATION SYSTEMS ON PERFORMANCE OF COMMERCIAL BANKS IN NYERI COUNTY, KENYA

Abstract

With increased competition, changing consumer needs, influence of globalization and employees’ diversity, commercial banks are driven to adopt strategic information systems to enhance their competitiveness in the changing business environment. The main objective of this study was to establish the influence of strategic information system on performance of commercial banks in Nyeri County, Kenya. The study was guided by the following objectives; determine the influence of internet banking on performance, to establish the influence of mobile banking and to establish the influence of automated teller machines on performance. The technology acceptance theory underpins the study through describing how Commercial Banks adopt strategic Information Systems to influence their performance. The tendency of customers accepting or rejecting an innovation launched is high or low if the innovation is perceived to be complex and difficult to be used. The study was carried out in Nyeri County and targeted 10 commercial banks of which 1000 employees were the target population. This study adopted explanatory research design. The study used stratified random sampling methods of research. From the use of Yamane formula the study obtained 287 respondents for the study. The study tested validity of the instruments by carrying out pilot study in the neighbouring Embu town. The findings were further investigated to find out the Cronbach alpha internal consistency coefficient to test reliability. Data was collected using a questionnaire which adopted both open- ended and closed-ended questions and further analyzed using both descriptive and inferential statistics; it was done with the aid of Statistical Package for Social Sciences (SPSS). The analyzed data was presented in Tables and figures. A multiple regression model was used to explore the relationship between Strategic information systems (internet banking, mobile banking and automated teller machine) on performance. From the model, (R2 = .747) showing that strategic information system account for 74.7% variation in performance. The study findings established that commercial banks determines positively internet banking (β=0.166, p value ≤0.05), mobile banking to improve their performance in terms of profits, customer satisfaction, minimize costs of production and compensate on return on investments. The study revealed that mobile banking services (β=0.411, p value ≤0.05) were adopted by consumers on a larger extent due to convenience of accessing financial information ranging from electronic financial statement and accessibility of banking services. The study also established that automated teller machine (β=0.750, p value ≤0.05) also had a large impact on the performance of commercial banks as it saves time and enhanced security. The study concluded that there was a positive relationship statistical relationship between independent variables and dependent variables of the study. Therefore, this study recommends that Commercial Banks should allocate adequate financial resources to create maximum awareness of their e banking services and train their staff to enhance their performance in the changing business environment. The study will benefit directors, managers, policy makers and scholars to understand how strategic information system influences performance.