Role of Internet Banking in Customer Acquisition for Commercial Banks in Kenya: A Case of Commercial Banks in Nairobi, Kenya

Abstract

The purpose of this study was to establish the role that internet banking has on customer acquisition for commercial banks in Kenya. The reason for this is that it is important to know the influence that internet banking has on how and why a commercial bank attracts a customer and retains its customers. It specifically assed, payment processing and account reporting as critical components that would demonstrate the relationship that exists between internet banking and the twin objectives of any progressive bank; acquisition of new clients and retention of the new and the older clients to assure future profitability and survival. Anchored on the customer service theory, the study employed a descriptive research design wherein the target population was 868 staff working in specific departments within the selected 9 banks as per the tiers. Stratified random sampling technique was used to come up with a sample of 269 respondents. Questionnaires was the data instrument used for collecting data which was then analysed using descriptive analysis in the forms of means and presenting the same in tables and graphs. Further, inferential statistics was used to assess the influence of internet banking in attracting and retaining customers by commercial banks in Kenya. Additionally, multiple regression was used to establish the relationship between the dependent and the independent variables in the study. The study is of great significant to commercial banks as it may help the banks to develop policies and strategies for attracting and retaining customers, to the CBK as it develops and deploys regulatory policies and to the research community in further development of customer acquisition and retention theories. The researcher conducted simple and multiple regression analysis in order to find out the relationship between internet banking characteristics and customer acquisition in the banking sector. The inferential results on influence of account reporting on customer acquisition in banking sector show R=0.673 indicating a strong positive correlation and R2=0.453 and there was a significant effect between account reporting on customer acquisition (t=2.548, p<0.05). The inferential results on influence of payment processing on customer acquisition R=.661 Indicating a strong positive correlation and R2=.437 and there was a significant effect between payment processing and customer acquisition (t=5.571, p<0.05). Banks need to structure their operation in order to fulfil a clients’ needs better. If possible, banks should come up with service delivery such as effective account reporting that add more value than existing customers and that are able to attract more customers. The study recommended that banks should strengthen their customer bonds. Improved customer bonds will enable both the firms and the customers to commit resources to the relationship built on high levels of trust and commitment. The study further suggest that a study be to be done on other factors (44.9%), as established in coefficient of determination) that contribution customers acquisition in the banking sector