Thesis:

Influence of financial novelties on performance of commercial banks in Trans Nzoia county, Kenya

The rapid evolution of financial innovations, including digital banking platforms, fintech partnerships, blockchain technologies, and automated trading systems, has significantly IV reshaped the operational landscape of commercial banks. In this era of financial revolution, from contactless payments to robot-advisors, cryptocurrencies, fintech innovations, and decentralized finance are becoming ubiquitous, traditional banks face a pivotal crossroads. This research project aims to unravel the impact of these financial novelties on performance of commercial banks in Trans Nzoia County, Kenya. Precise objective includes; influence of global connectivity, online trading, diversification and artificial intelligence (AI) on the performance of commercial banks in Trans-Nzoia County Kenya. The study was anchored on Innovation Diffusion and Schumpeterian Innovation Theories. The study utilized a descriptive research design. A sample size of 136 respondents was determined from a target population of 207 people using Yamane’s formulae. Questionnaires were used in collecting data. The data was presented using tables. The instruments were tested for reliability using Cronbach’s Alpha Reliability test while content validity was assessed using expert opinion. The study employed both descriptive and inferential statistics in analysis and used correlation and regression analysis as key analytical models. Results established varied disparities in performance of commercial banks. Regression results demonstrated that financial novelties (global connectivity, online trading, diversification, and artificial intelligence) all had statistically significant influence on performance of commercial banks. The Coefficient of Determination or R square stood at 0.734, which implied that 73.40% of the variation in the performance of commercial banks was explained by variability in the variables under financial novelties (global connectivity, online trading, diversification, and artificial intelligence). Pearson Correlation Analysis results further demonstrated a positive relationship between global connectivity, online trading, diversification, and artificial intelligence to improve financial novelties on performance of commercial banks. The study recommends more pursuit of financial novelties as demonstrated in the Innovation Diffusion, Schumpeterian Innovation Theory, Intermediation theory and Agency theories of financial novelties to enhance performance of commercial banks. Top Management of commercial banks in Trans Nzoia County, Kenya should embrace on the technologies that improves financial novelties in order to enhance performance of commercial banks in Trans Nzoia County, Kenya.