Branchless Banking Services and Financial Stability of Commercial Banks in Kenya

Purpose: Financial stability is a key goal for commercial banks, as it allows them to operate effectively in fulfilling their role as intermediaries in the financial system. Technological advancements, creative financial products, shifting consumer needs, and the utilization of different distribution channels are all having an impact on the banking sector. The purpose of this study was to investigate how Kenyan commercial banks' financial stability is impacted by branchless banking services. Methods: Using an explanatory research approach, the study concentrated on all 38 commercial banks as of December 31, 2023. From commercial banks, primary and secondary data spanning the years 2016 to 2022 was gathered. Data collecting sheets were used to gather secondary data. The gathered data were coded, cleaned, tabulated, and shown in tables before analysis. Statistics, both descriptive and inferential, were used to conclude. Descriptive statistics included the mean and standard deviation and inferential statistics included regression analysis. STATA 15 software was used for the analysis in this study. Results: The study found a positive and significant relationship between agency, mobile, and online banking services and financial stability. Conclusion: Agency, mobile, and online banking services have a positive and significant effect on financial stability of commercial banks. The study made recommendations that commercial banks should implement measures that will lead to increased use of branchless services such as ATM banking, agency banking, mobile banking, and online banking to improve their financial stability. The study also recommended that policymakers should make policies that aim at increasing the use of branchless banking services.