STRATEGIC FACTORS AND COMPETITIVENESS OF COMMERCIAL BANKS IN KENYA

Abstract

The competitiveness of Kenya's commercial banking sector was investigated as a critical factor in driving economic growth and financial inclusion. The study explored strategic factors influencing competitiveness, focusing on retail network expansion and financial leverage. A descriptive research design was employed, collecting data from 44 branches of KCB Group and Consolidated Bank in Nairobi, Kiambu, and Murang’a Counties. Analytical methods, including regression, ANOVA, and correlation analyses, were utilized to evaluate these relationships. The findings indicated that retail network expansion, particularly branch establishment, significantly enhanced market presence and customer acquisition, although digital platforms were essential for broader accessibility. Financial leverage, with a focus on Return on Equity (ROE), emerged as a key driver of market share and operational stability, supported by liquidity. The study concluded that Kenyan banks needed to balance physical and digital expansion, leverage financial strategies, optimize asset acquisition, and adopt adaptive communication approaches to sustain competitiveness. Recommendations included the integration of fintech innovations, optimization of workforce development, and exploration of emerging communication technologies. These findings contributed to strategic management literature and provided actionable insights for banks navigating Kenya's dynamic financial landscape. Future research was suggested to investigate digital transformation's role and conduct cross-regional comparative studies on competitiveness.

Key Words: Strategic Factors, Competitiveness, Retail Network Expansion, Financial Leverage, Commercial Banks in Kenya