DIGITAL FINANCIAL STRATEGY AND COMPETITIVE ADVANTAGE OF DEPOSIT-TAKING SACCOS IN NAKURU COUNTY, KENYA

Statement of the Problem: Increasing competition from financial technology (FinTech) companies has intensified the need for deposit-taking Savings and Credit Cooperative Organizations (DT-SACCOs) to embrace digital transformation to strengthen their competitive advantage. However, many DT-SACCOs continue to experience challenges in digital product innovation, digital channel integration, investment in digital infrastructure, and data analytics utilization, limiting their operational efficiency, service differentiation, customer satisfaction, and market competitiveness. Purpose of the Study: The study examined the influence of digital financial strategy on the competitive advantage of deposit-taking SACCOs in Nakuru County, Kenya. Methodology: The study adopted a quantitative approach using an explanatory research design and was anchored on the Resource-Based View Theory and Dynamic Capabilities Theory. The target population comprised 120 respondents drawn from 30 selected deposit-taking SACCOs in Nakuru County, including information and communication technology officers, operations managers, finance managers, and data analytics officers. A census approach was employed to include all targeted respondents. Primary data were collected using structured questionnaires with a five-point Likert scale and analyzed using descriptive statistics and Ordinary Least Squares (OLS) regression analysis. Findings: The findings revealed that digital product innovation, digital channel integration, digital investment intensity, and data analytics utilization all had positive and statistically significant influences on the competitive advantage of deposit-taking SACCOs. Digital investment intensity emerged as the strongest predictor of competitive advantage, followed by data analytics utilization, digital channel integration, and digital product innovation. Conclusion: The study concluded that digital financial strategy significantly contributed to the competitive advantage of deposit-taking SACCOs in Nakuru County. The findings supported the Resource-Based View Theory and Dynamic Capabilities Theory by demonstrating the importance of digital capabilities in strengthening sustainable competitive advantage. Recommendations: The study recommends that SACCO managers should strengthen digital transformation initiatives by prioritizing investment in digital infrastructure, enhancing data analytics capabilities, integrating digital service channels, and promoting digital product innovation. Policymakers and regulators should support digital transformation initiatives to improve the competitiveness and sustainability of deposit-taking SACCOs. Keywords: Digital, Financial Strategy, Competitive Advantage, Deposit-Taking SACCOs, Nakuru County, Kenya