Influence of block chain technology on organizational governance in the financial services in Kenya: a case of equity bank

Abstract

Blockchain technology has emerged as a crucial tool for modern financial institutions, enabling them to maintain a competitive edge amidst rapid technological advancements, heightened public awareness, and evolving stakeholder expectations. This study justified its investigation into the influence of blockchain technology on the organizational governance of Equity Bank. The research aimed at exploring the relationship between blockchain implementation and governance practices, focusing on specific areas such as transparency, security, operational efficiency, interoperability, and data integrity. The objectives were to assess the effect of blockchain-based transparency improvements on governance, evaluate security measures' role in governance practices, analyze how operational efficiency enhancements strengthen governance, examine interoperability's contribution to effective governance, and explore the influence of data integrity on governance, establishing a comprehensive framework for analysis. A quantitative descriptive research design was employed, with data collected from 200 employees selected through proportionate stratified random sampling from various departments, including IT, finance, compliance, and executive management. Yamane’s formula was used to determine the sample size, ensuring a 95% confidence level and a 5% margin of error, providing a statistically robust foundation for the findings. The study was guided by agency theory, stakeholder theory, and transaction cost theory, offering a strong theoretical underpinning for understanding the observed relationships. Data were analyzed using both descriptive and inferential statistical methods, and the findings were presented in tables, charts, and graphs. Results indicated that transparency, as facilitated by blockchain, significantly improved governance by enhancing information accessibility and real-time reporting (β=0.431,p<0.05). Security measures implemented through blockchain also had a positive effect on organizational governance (β=0.287,p<0.05), while operational efficiency improvements were statistically significant in reinforcing governance practices (β=0.312,p<0.05). Furthermore, interoperability contributed positively to governance (β=0.254,p<0.05), and data integrity was crucial in supporting effective governance structures (β=0.298,p<0.05). The study concluded that blockchain technology is an instrumental factor in advancing organizational governance in financial institutions. It is recommended that Equity Bank and other commercial banks integrate comprehensive blockchain solutions to enhance transparency, improve security, streamline operations, and maintain robust governance standards.