Digital Information Systems and Operational Performance of Microfinance Institutions in Nairobi City County, Kenya

Author

Edwin Omambia, Laura Nyaloti


Abstract

 This study examined the effect of digital information systems on the operational performance of microfinance institutions (MFIs) in Nairobi City County, Kenya. It assessed four systems: tablet banking, mobile money, online banking and automated credit scoring. The study was anchored on Dynamic Capabilities Theory, supported by Diffusion of Innovation and Task-Technology Fit theories. A descriptive research design was used. From a target population of 506 respondents drawn from 23 MFIs (top management, middle management and operational staff), a stratified random sample of 224 was selected using Slovin's formula, and 170 questionnaires were completed (response rate 75.9%). Data were analyzed in SPSS version 30 using descriptive statistics and multiple regression. The model was significant, F(4, 165) = 69.95, p < .001, and explained 62.9% of the variation in operational performance (R = 0.793; adjusted R² = 0.620). Mobile money (B = 0.208, p = .013) and automated credit scoring (B = 0.238, p < .001) had positive and significant effects. Tablet banking (B = 0.119, p = .149) and online banking (B = 0.150, p = .069) were positively related to performance but not significantly so. Descriptive results showed that the systems were seen as accessible and, in several cases, easy to use, but were weakly integrated, unevenly used and less satisfying to staff. The study recommends that MFIs integrate tablet banking with core ICT systems, improve the speed, cost and accuracy of mobile money, invest in network infrastructure and customer education for online banking, and improve the data quality and integration of automated credit scoring.



Keywords

digital information systems; operational performance; microfinance institutions; tablet banking; mobile money; online banking; automated credit scoring; Nairobi City County



Full Text:

Download Paper PDF


References


  • Aliong'o, L. K., & Waithaka, P. (2024). The effect of market innovation on the performance of microfinance banks in Nairobi City County, Kenya. The Strategic Journal of Business & Change Management, 11(2), 1558–1570.
  • Atisa, J. O., & Mose, G. N. (2024). Information and communication technology adoption and procurement performance of manufacturing firms in Nairobi City County, Kenya.
  • Barakabitze, A. A., Kitindi, E. J., Sanga, C. A., Kibirige, I., & Azizi, M. (2019). New technologies for science and education: Challenges and opportunities for Tanzania. International Journal of Educational Development Using Information and Communication Technology, 15(1), 1–17.
  • Boateng, H., Amponsah, S. A., & Owusu, A. (2019). Mobile banking adoption and performance in Ghanaian banking institutions.
  • Chaulagain, K. P., & Lamichhane, B. D. (2022). Determinants factors of microfinance performance in Nepal. Journal of Nepalese Business Studies, 15(1), 46–59.
  • Chesaina, J. K., & Murigi, E. M. (2025). Strategic drivers of information and communication technology and performance of state corporations in Kenya.
  • Cooper, D. R., & Schindler, P. S. (2010). Business research methods(11th ed.). McGraw-Hill Education.
  • Goodhue, D. L., & Thompson, R. L. (1995). Task–technology fit and individual performance. MIS Quarterly, 19(2), 213–236. https://doi.org/10.2307/249689
  • Komuhangi, M. (2021). Electronic banking and operational efficiency of financial organizations: A case of Pride Microfinance Limited.
  • Leung, K., & Mathews, J. (2021). Automated credit scoring and operational performance of European credit unions.
  • Lokaale, J. K., et al. (2025). ICT infrastructure and service delivery in Turkana County Government, Kenya.
  • Maina, J. M., et al. (2023). Credit scoring technologies and operational efficiency among small and medium enterprises in Nairobi County, Kenya.
  • Mbugua, J. W., & Suva, D. (2024). Mobile money payment services and financial performance of local businesses in Kiambu County, Kenya. https://doi.org/10.32898/ibmj/01/6.4article16
  • Mugenda, O. M., & Mugenda, A. G. (2019). Research methods: Quantitative, qualitative & mixed methods approaches(3rd ed.). Centre for Innovative Leadership & Governance.
  • Mutea, J. (2022). Electronic banking and financial performance of commercial banks in Kenya.
  • Mwaura, P. M., & Makori, E. O. (2024). Mobile banking transactions and financial performance of Tier 1 commercial banks in Kenya.
  • Ndirangu, E., Kiragu, D., Ngunyi, A., Shano, M., & Kimani, J. (2022). Effect of online banking on performance of microfinance banking in Kenya. International Journal of Finance, 7(6), 59–71. https://doi.org/10.47941/ijf.1152
  • Njenga, S. N., et al. (2021). Mobile payment systems and firm performance among retail supermarkets in Nairobi County, Kenya.
  • Obunga, R. O., et al. (2021). Online banking and performance of small and medium enterprises in Kenya.
  • Rogers, E. M. (2003). Diffusion of innovations(5th ed.). Free Press.
  • Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of sustainable enterprise performance. Strategic Management Journal, 28(13), 1319–1350. https://doi.org/10.1002/smj.640
  • Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7%3C509::AID-SMJ882%3E3.0.CO;2-Z
  • Wanjiru, J. W., & Lugalia, P. (2022). Automated credit scoring and loan portfolio performance of microfinance institutions in Kenya.


 

Share your valuable work from Social Media Buttons