Influence of Technological Innovation on Financial Performance of Deposit Taking Microfinance Institutions in Nairobi County

Abstract

The purpose of this study is to examine the influence of technological innovation on financial performance of Deposit Taking Microfinance Institutions (DTMFI’s) in Nairobi County, Kenya. Research was guided by the following research objective: Does technological innovation affect microfinance institutions’ performance in Nairobi? The study adopted a quantitative methodology and a descriptive research design. The target population and sample were 132 which was selected through a census method. A Likert scale type questionnaire was used to collect data. A sample of 103 participants out of the 132 took part in the study. The findings of ANOVA results revealed regression was significant at p-value (0.000). The correlation matrix between financial performance and technological innovation revealed that there is a significant and positive relationship between financial performance and technological innovation at p (0.000) and r (.573^**). This therefore showed that technological innovation has a positive influence on financial performance. The study concluded that technological innovation is significant in enhancing the financial performance of deposit-taking microfinance institutions. Therefore, there is a likelihood of increased financial performance in DTMFI’s if they can integrate technology. The study further recommended that use of technology would go a long way in streamlining DTMFI’s core services of money management and movement, lending, investments and savings.