Effect of e-business strategy on the performance of Commercial Banks in Eldoret, Kenya

Abstract

The advent of networked economy calls for new understanding of business, and it is evidenced by the visible trend of traditional businesses migrating to E-business. Constant change in the environment means continually evolving strategies, new products, new processes and new technologies to adopt. Many commercial banks globally and in Kenya have opted to adopt E- business strategy to improve their performance. This study examined the effect of E-business strategy on the performance of commercial banks in Eldoret, Kenya. The objectives of the study were to determine the effect of business to business, business to customer and Intra-business E- Business strategy on performance of Commercial Banks. The performance indicators studied were market share, customer relationship management, business process efficiency and productivity and cost reduction. The study used correlational research design. The target population was top management and middle management staff of the 30 commercial banks operating in Eldoret, Kenya. Simple random sampling technique was used to select a sample of thirty-six (36) employees used in the study. A questionnaire was administered to respondents to collect data. Reliability test of the instruments was done using Cronbach alpha coefficient. Data collected was edited and processed using Statistical Package for the Social Sciences (SPSS). Descriptive statistics such as mean, frequencies, and standard deviation were used to describe the research variables. Correlation analysis was used to examine the strength of relationships between E-business strategy and performance of commercial banks. Regression analysis was used to determine the effect E-business strategy on the perfonnance of commercial banks. The results indicated that there was a positive relationship between E-Business strategy and performance of commercial banks as it increased market share, business process efficiency and productivity, customer relationship management, and cost reduction. Moreover, multiple regression analysis indicates that the business to business, business to customer, and intra- business E-business strategy collectively explains 49.5% of the variation in the performance of commercial banks. Therefore, the study recommends that commercial banks should implement E-business strategy to improve performance.