Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya

Henry Bartoo; Samuel Warui; Robert Kasisi

doi:doi:10.11648/j.jfa.20251302.11

Research Article |

| Peer-Reviewed

Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya

Henry Bartoo^*, Samuel Warui, Robert Kasisi

Published in Journal of Finance and Accounting (Volume 13, Issue 2)

Received: 17 February 2025 Accepted: 25 February 2025 Published: 21 March 2025

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

The adoption of financial technology (FinTech) has transformed the banking sector by enhancing operational efficiency and service delivery. This study examines the relationship between FinTech adoption and the technical efficiency of commercial banks in Kenya. Using Pearson correlation analysis, the study establishes strong positive relationships between FinTech adoption and technical efficiency (r = 0.68), as well as mobile banking (r = 0.66) and digital lending (r = 0.62) with technical efficiency. A multiple regression model was employed to assess the predictive influence of FinTech adoption, mobile banking, and digital lending on technical efficiency. The results indicate that all three variables significantly impact technical efficiency, with FinTech adoption (β = 0.42, p < 0.01), mobile banking (β = 0.35, p < 0.01), and digital lending (β = 0.29, p < 0.01) playing a crucial role in optimizing banking operations. The study concludes that FinTech adoption is a key driver of technical efficiency, as it streamlines banking operations, reduces transaction costs, and enhances customer experience. Despite progress in FinTech integration, commercial banks still face challenges related to system reliability and scalability, highlighting the need for continuous investment in digital infrastructure. The study recommends that commercial banks in Kenya prioritize investment in advanced FinTech solutions, particularly by expanding mobile banking functionalities and optimizing digital lending platforms through data-driven risk assessment. Additionally, financial regulators should create policies that foster an enabling environment for FinTech innovation while ensuring data privacy and cybersecurity. Capacity-building initiatives and strategic partnerships between banks, FinTech firms, and academic institutions are also crucial in enhancing FinTech adoption and sustaining long-term efficiency gains. These findings contribute to the understanding of FinTech’s role in improving banking performance and provide insights for policymakers and industry stakeholders aiming to enhance financial sector efficiency.

Published in	Journal of Finance and Accounting (Volume 13, Issue 2)
DOI	10.11648/j.jfa.20251302.11
Page(s)	64-70
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2025. Published by Science Publishing Group

Keywords

Fintech Adoption, Mobile Banking, Digital Lending, Technical Efficiency, Commercial Banks, Kenya

References

[1]	Abdallah, W. M., Abdou, H. A., & El-Sayed, A. (2016). Financial performance and efficiency of Islamic versus conventional banks: Evidence from the Gulf Cooperation Council countries. Review of Financial Economics, 31, 1–14. https://doi.org/10.1016/j.rfe.2016.06.005
[2]	Beck, T., Demirgüç-Kunt, A., & Singer, D. (2013). Is small beautiful? Financial structure, size, and access to finance. World Development, 52, 19–33. https://doi.org/10.1016/j.worlddev.2013.05.014
[3]	Berger, A. N., & Mester, L. J. (1997). Inside the black box: What explains differences in the efficiencies of financial institutions? Journal of Banking & Finance, 21(7), 895–947. https://doi.org/10.1016/S0378-4266(97)00010-1
[4]	Gomber, P., Koch, J. A., & Siering, M. (2017). Digital finance and FinTech: Current research and future research directions. Journal of Business Economics, 87(5), 537–580. https://doi.org/10.1007/s11573-017-0852-x
[5]	Hossain, M. A. (2020). Impact of financial technology (FinTech) on financial inclusion and economic development in developing countries: A review of literature. International Journal of Finance & Banking Studies, 9(1), 43–54. https://doi.org/10.20525/ijfbs.v9i1.646
[6]	Mazzucato, M., & Semieniuk, G. (2018). Financing renewable energy: Who is financing what and why it matters. Technological Forecasting and Social Change, 127, 8–22. https://doi.org/10.1016/j.techfore.2017.05.021
[7]	Schueffel, P. (2016). Taming the beast: A scientific definition of FinTech. Journal of Innovation Management, 4(4), 32–54. https://doi.org/10.24840/2183-0606_004.004_0004
[8]	Zhang, D., Zhuge, J., Freeman, R. B., & Griffiths, J. (2021). The role of FinTech in improving financial inclusion: Evidence from China. Emerging Markets Finance and Trade, 57(1), 1–18. https://doi.org/10.1080/1540496X.2020.1853282
[9]	Kamau, C. N., & Muturi, W. M. (2017). "Regulation and Performance of Commercial Banks in Kenya."
[10]	Karanja, P. M., et al. (2019). "The Role of Robo-Advisors in Banking: A Comparative Analysis."
[11]	Lago, E. (2019). Disrupting Banking: Digital Revolution and Disintermediation. Journal of Management and Strategy, 10(3), 35-42.
[12]	Misati, R. N., Kamau, A. W., Kipyegon, L., & Wandaka, S. (2019). Mobile banking and financial inclusion: The regulatory perspective. Journal of African Business, 20(2), 260-282.
[13]	Musila, J. W. (2013). Determinants of financial performance of commercial banks in Kenya. International Journal of Economics, Commerce and Management, 1(5), 1-15.
[14]	Mutwol, M. J., & Tanui, S. K. (2018). "Mobile Lending and Financial Performance of Commercial Banks in Kenya."
[15]	Nagarkar, P. (2015). Banking on Regulatory Cooperation: From Single Regulators to Shared Regulation (Doctoral dissertation, International Max Planck Research School for Maritime Affairs).
[16]	Richard, O. C., Devinney, T. M., Yip, G. S., & Johnson, G. (2009). Measuring organizational performance: Towards methodological best practice. Journal of Management, 35(3), 718-804.
[17]	Schumpeter, J. A. (1934). The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle (R. Opie, Trans.). Harvard University Press.Suri, T., & Jack, W. (2016). "The Long-Run Poverty and Gender Impacts of Mobile Money."
[18]	Tanna, S., & De Pablos, I. (2010). The impact of banking regulation in the development of cost efficiency in the Japanese banking sector: A DEA analysis. International Research Journal of Finance and Economics, 39, 51-73.
[19]	Thompson, R., & Wilson, K. (2018). "Mobile Banking Adoption and Operational Efficiency in Kenyan Banks."
[20]	Uwilingiyimana, C., Shim, E., Cho, H., & Cho, Y. J. (2015). Banking regulations and efficiency: A case of microfinance institutions in sub-Saharan Africa. International Journal of Social Economics, 42(8), 720-736.
[21]	Widarwati, T., Solihin, Y., & Nurmalasari, I. (2022). Financial technology adoption in banking industry: A literature review. IOP Conference Series: Materials Science and Engineering, 1271(1), 012032.

Cite This Article

Plain Text BibTeX RIS

APA Style

Bartoo, H., Warui, S., Kasisi, R. (2025). Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya. Journal of Finance and Accounting, 13(2), 64-70. https://doi.org/10.11648/j.jfa.20251302.11

Copy | Download

ACS Style

Bartoo, H.; Warui, S.; Kasisi, R. Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya. J. Finance Account. 2025, 13(2), 64-70. doi: 10.11648/j.jfa.20251302.11

Copy | Download

AMA Style

Bartoo H, Warui S, Kasisi R. Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya. J Finance Account. 2025;13(2):64-70. doi: 10.11648/j.jfa.20251302.11

Copy | Download

@article{10.11648/j.jfa.20251302.11,
  author = {Henry Bartoo and Samuel Warui and Robert Kasisi},
  title = {Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya
},
  journal = {Journal of Finance and Accounting},
  volume = {13},
  number = {2},
  pages = {64-70},
  doi = {10.11648/j.jfa.20251302.11},
  url = {https://doi.org/10.11648/j.jfa.20251302.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20251302.11},
  abstract = {The adoption of financial technology (FinTech) has transformed the banking sector by enhancing operational efficiency and service delivery. This study examines the relationship between FinTech adoption and the technical efficiency of commercial banks in Kenya. Using Pearson correlation analysis, the study establishes strong positive relationships between FinTech adoption and technical efficiency (r = 0.68), as well as mobile banking (r = 0.66) and digital lending (r = 0.62) with technical efficiency. A multiple regression model was employed to assess the predictive influence of FinTech adoption, mobile banking, and digital lending on technical efficiency. The results indicate that all three variables significantly impact technical efficiency, with FinTech adoption (β = 0.42, p < 0.01), mobile banking (β = 0.35, p < 0.01), and digital lending (β = 0.29, p < 0.01) playing a crucial role in optimizing banking operations. The study concludes that FinTech adoption is a key driver of technical efficiency, as it streamlines banking operations, reduces transaction costs, and enhances customer experience. Despite progress in FinTech integration, commercial banks still face challenges related to system reliability and scalability, highlighting the need for continuous investment in digital infrastructure. The study recommends that commercial banks in Kenya prioritize investment in advanced FinTech solutions, particularly by expanding mobile banking functionalities and optimizing digital lending platforms through data-driven risk assessment. Additionally, financial regulators should create policies that foster an enabling environment for FinTech innovation while ensuring data privacy and cybersecurity. Capacity-building initiatives and strategic partnerships between banks, FinTech firms, and academic institutions are also crucial in enhancing FinTech adoption and sustaining long-term efficiency gains. These findings contribute to the understanding of FinTech’s role in improving banking performance and provide insights for policymakers and industry stakeholders aiming to enhance financial sector efficiency.
},
 year = {2025}
}

Copy | Download

TY  - JOUR
T1  - Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya

AU  - Henry Bartoo
AU  - Samuel Warui
AU  - Robert Kasisi
Y1  - 2025/03/21
PY  - 2025
N1  - https://doi.org/10.11648/j.jfa.20251302.11
DO  - 10.11648/j.jfa.20251302.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 64
EP  - 70
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20251302.11
AB  - The adoption of financial technology (FinTech) has transformed the banking sector by enhancing operational efficiency and service delivery. This study examines the relationship between FinTech adoption and the technical efficiency of commercial banks in Kenya. Using Pearson correlation analysis, the study establishes strong positive relationships between FinTech adoption and technical efficiency (r = 0.68), as well as mobile banking (r = 0.66) and digital lending (r = 0.62) with technical efficiency. A multiple regression model was employed to assess the predictive influence of FinTech adoption, mobile banking, and digital lending on technical efficiency. The results indicate that all three variables significantly impact technical efficiency, with FinTech adoption (β = 0.42, p < 0.01), mobile banking (β = 0.35, p < 0.01), and digital lending (β = 0.29, p < 0.01) playing a crucial role in optimizing banking operations. The study concludes that FinTech adoption is a key driver of technical efficiency, as it streamlines banking operations, reduces transaction costs, and enhances customer experience. Despite progress in FinTech integration, commercial banks still face challenges related to system reliability and scalability, highlighting the need for continuous investment in digital infrastructure. The study recommends that commercial banks in Kenya prioritize investment in advanced FinTech solutions, particularly by expanding mobile banking functionalities and optimizing digital lending platforms through data-driven risk assessment. Additionally, financial regulators should create policies that foster an enabling environment for FinTech innovation while ensuring data privacy and cybersecurity. Capacity-building initiatives and strategic partnerships between banks, FinTech firms, and academic institutions are also crucial in enhancing FinTech adoption and sustaining long-term efficiency gains. These findings contribute to the understanding of FinTech’s role in improving banking performance and provide insights for policymakers and industry stakeholders aiming to enhance financial sector efficiency.

VL  - 13
IS  - 2
ER  -

Copy | Download

Author Information

Henry Bartoo

Department of Commerce and Economic Studies, School of Business, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

Contact Email
Samuel Warui

Department of Commerce and Economic Studies, School of Business, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

Contact Email
Robert Kasisi

Department of Commerce and Economic Studies, School of Business, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

Contact Email

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Bartoo, H., Warui, S., Kasisi, R. (2025). Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya. Journal of Finance and Accounting, 13(2), 64-70. https://doi.org/10.11648/j.jfa.20251302.11

Copy | Download

ACS Style

Bartoo, H.; Warui, S.; Kasisi, R. Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya. J. Finance Account. 2025, 13(2), 64-70. doi: 10.11648/j.jfa.20251302.11

Copy | Download

AMA Style

Bartoo H, Warui S, Kasisi R. Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya. J Finance Account. 2025;13(2):64-70. doi: 10.11648/j.jfa.20251302.11

Copy | Download

@article{10.11648/j.jfa.20251302.11,
  author = {Henry Bartoo and Samuel Warui and Robert Kasisi},
  title = {Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya
},
  journal = {Journal of Finance and Accounting},
  volume = {13},
  number = {2},
  pages = {64-70},
  doi = {10.11648/j.jfa.20251302.11},
  url = {https://doi.org/10.11648/j.jfa.20251302.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20251302.11},
  abstract = {The adoption of financial technology (FinTech) has transformed the banking sector by enhancing operational efficiency and service delivery. This study examines the relationship between FinTech adoption and the technical efficiency of commercial banks in Kenya. Using Pearson correlation analysis, the study establishes strong positive relationships between FinTech adoption and technical efficiency (r = 0.68), as well as mobile banking (r = 0.66) and digital lending (r = 0.62) with technical efficiency. A multiple regression model was employed to assess the predictive influence of FinTech adoption, mobile banking, and digital lending on technical efficiency. The results indicate that all three variables significantly impact technical efficiency, with FinTech adoption (β = 0.42, p < 0.01), mobile banking (β = 0.35, p < 0.01), and digital lending (β = 0.29, p < 0.01) playing a crucial role in optimizing banking operations. The study concludes that FinTech adoption is a key driver of technical efficiency, as it streamlines banking operations, reduces transaction costs, and enhances customer experience. Despite progress in FinTech integration, commercial banks still face challenges related to system reliability and scalability, highlighting the need for continuous investment in digital infrastructure. The study recommends that commercial banks in Kenya prioritize investment in advanced FinTech solutions, particularly by expanding mobile banking functionalities and optimizing digital lending platforms through data-driven risk assessment. Additionally, financial regulators should create policies that foster an enabling environment for FinTech innovation while ensuring data privacy and cybersecurity. Capacity-building initiatives and strategic partnerships between banks, FinTech firms, and academic institutions are also crucial in enhancing FinTech adoption and sustaining long-term efficiency gains. These findings contribute to the understanding of FinTech’s role in improving banking performance and provide insights for policymakers and industry stakeholders aiming to enhance financial sector efficiency.
},
 year = {2025}
}

Copy | Download

TY  - JOUR
T1  - Financial Technology Adoption and Technical Efficiency of Commercial Banks in Kenya

AU  - Henry Bartoo
AU  - Samuel Warui
AU  - Robert Kasisi
Y1  - 2025/03/21
PY  - 2025
N1  - https://doi.org/10.11648/j.jfa.20251302.11
DO  - 10.11648/j.jfa.20251302.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 64
EP  - 70
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20251302.11
AB  - The adoption of financial technology (FinTech) has transformed the banking sector by enhancing operational efficiency and service delivery. This study examines the relationship between FinTech adoption and the technical efficiency of commercial banks in Kenya. Using Pearson correlation analysis, the study establishes strong positive relationships between FinTech adoption and technical efficiency (r = 0.68), as well as mobile banking (r = 0.66) and digital lending (r = 0.62) with technical efficiency. A multiple regression model was employed to assess the predictive influence of FinTech adoption, mobile banking, and digital lending on technical efficiency. The results indicate that all three variables significantly impact technical efficiency, with FinTech adoption (β = 0.42, p < 0.01), mobile banking (β = 0.35, p < 0.01), and digital lending (β = 0.29, p < 0.01) playing a crucial role in optimizing banking operations. The study concludes that FinTech adoption is a key driver of technical efficiency, as it streamlines banking operations, reduces transaction costs, and enhances customer experience. Despite progress in FinTech integration, commercial banks still face challenges related to system reliability and scalability, highlighting the need for continuous investment in digital infrastructure. The study recommends that commercial banks in Kenya prioritize investment in advanced FinTech solutions, particularly by expanding mobile banking functionalities and optimizing digital lending platforms through data-driven risk assessment. Additionally, financial regulators should create policies that foster an enabling environment for FinTech innovation while ensuring data privacy and cybersecurity. Capacity-building initiatives and strategic partnerships between banks, FinTech firms, and academic institutions are also crucial in enhancing FinTech adoption and sustaining long-term efficiency gains. These findings contribute to the understanding of FinTech’s role in improving banking performance and provide insights for policymakers and industry stakeholders aiming to enhance financial sector efficiency.

VL  - 13
IS  - 2
ER  -

Copy | Download