Commercial banks in Kenya have adopted alternative banking platforms that, because alternative banking has become synonymous with commercial banks in Kenya, reflect a change in the delivery of banking and financial services. Although banks have been able to exploit available technology to provide customers with alternative avenues for banking services, the challenge facing them today is to maximize the use of these channels in order to enhance their performance. The study investigated effects of financial innovations on Kenyan commercial banks performance. The research’s specific objectives were to examine how internet, mobile, agency and ATM banking influenced Kenyan commercial banks performance. The study was guided by agency theory, balanced score card and diffusion of innovation theory. Descriptive research design was employed and16 commercial banks in Kenya that, from 2013 to 2017were targeted, adopted all four financial innovations. In each of the selected banks, the sample size was 80 respondents, consisting of 5 senior management staff. Using simple random sampling, the officials were selected. To gather primary data from the respondents, this study used a questionnaire. The content analysis approach was used to analyze qualitative data collected and reported from open-ended questions in narrative form. Descriptive statistics were used in order to measure the quantitative data. Multiple regression analysis was used to display the relationship between independent variables against the dependent variable. It was found out that internet, mobile, agency and ATM banking had a positively and significantly affected commercial banks’ performance. It was concluded that the growth of the Internet has greatly benefited the banking industry. The Internet has radically altered the way banking networks are built to meet the demands and desires of customers. Mobile banking offers commercial banks in Kenya a strong opportunity to meet many Kenyan mobile phone subscribers who have remained unbanked and unreached due to restricted access to the country's bank branch networks. The access of the community to the large masses through mobile banking gives banks the chance to expand by hitting the unbanked population. Agency banking has led to accessibility of financial service to many customer in remote areas and hence an increase in effectiveness and efficiency in service delivery. Customers are satisfied with the automated teller machine services due to ease of use, transaction cost and security of operation, still not happy with cash dispensing from the automated teller machine. The study advises that in their everyday activities, including deposits, purchases and money transfers, the public and companies must be encouraged to use Internet banking. Kenya’s commercial banks should ensure the convenience and security of mobile banking through written guidelines on mobile banking convenience and security. The number of agents in real estate and in rural areas should be increased by commercial banks in Kenya. By reducing the criteria of being a bank agent, this can be achieved. Banks can use personalized software to record relevant details on automated teller machine cards in order for banks to assess whether or not fraudulent transactions have taken place.
