Process Innovation and Financial Inclusion of Microfinance Customers in North Rift Region of Kenya

Florence Chemtai, Francis Omillo Okumu, Geoffrey Kiptum Kimutai


Conventional banking methods have failed to effectively address the problem of financial exclusion that contributes to poverty and income inequalities among low-income segments of the market. This study assessed the effect of processes innovation (mobile and internet banking) on financial inclusions of selected MFIs’ customers in Kenya. Specifically, the study tested if there was no statistically significant effect of mobile banking and internet banking on financial inclusions of selected MFI customers in Kenya. It was conducted among MFIs in Samburu and Turkana counties in North Rift Kenya. Explanatory research design with semi-structured questionnaires were used to collect data from customers of 10 MFIs in North Rift Kenya. Using Nassiuma’s formula, a sample of 418 respondents from a population of 2185 customers was drawn. Data was collected using questionnaires and analysed using descriptive (frequencies, percentages, mean and standard deviation) and inferential statistics (linear regression) with the aid of SPSS. The findings showed that mobile banking had a significant effect on financial inclusion, that internet banking had no significant effect on financial inclusion, and process innovation had a significant effect on financial inclusion. Subsequently, the study recommends that the government of Kenya should develop and implement policies that promote innovation and mobile banking in Kenya. Secondly, MFI and mobile service providers should invest in mobile infrastructure and networks. The study, therefore, seeks to improve MFI strategies and systems in addressing financial inclusion that promote growth opportunities that enhance persistent incomes and economic growth among the rural and marginal people.

Full Text:



Abdi, A.A., Hussein, F.M., & Kadir, H.B. (2022). Effect of electronic banking on financial inclusion among commercial banks in Somalia. International Journal of Finance and Accounting, 7(2), 43-54.

Aderonke, A.A. (2010). An empirical investigation of the level of users' acceptance of e-banking in Nigeria. Journal of Internet Banking and Commerce, 15(1), 1-13.

Aduda, J., & Kalunda, E. (2012). Financial Inclusion and Financial Sector Stability with Reference to Kenya: A Review of Literature. Journal of Applied Finance & Banking, 2(6), 95-120.

Al-Weshah, G. A. (2013). The role of ICT banking in continuous improvement areas: Quantitative evidence from Jordanian banks. International Journal of Business Performance Management, 14(2), 181-196.

Arenaza, S. (2014). Digital financial services and microfinance: State of play. A framing note to inform the evolution of the client protection standards. Paris: Smart Campaign and Accion Channels and Technology Team.

Asongu, S.A. (2012). Government quality determinants of stock market performance in African countries. Journal of African Business, 13(3), 183-199.

Cadena, A., Remes, J., Grosman, N., & Oliveira, A. D. (2017). Where will Latin America’s growth come from? McKinsey Global Institute.

Central Bank of Kenya. (2019). 2019 FinAccess household survey. Nairobi: CBK.

Chan, D. (2010). Detection of differential item functioning on the Kirton adaption-innovation inventory using multiple-group mean and covariance structure analyses. Multivariate Behavioural Research, 35(2), 169-199.

Dellepiane, R., Angel, M., Terence, G., Crowther, N.M. (2015). Factors influencing poverty outreach among microfinance institutions in Latin America (English). Washington, D.C.: World Bank Group.

Demombynes, G., & Thegeya, A. (2012). Kenya's mobile revolution and the promise of mobile savings. World Bank Policy Research Working Paper no. 5988. World Bank.

Farooqui, A., & Rajani, P. (2017). E-Banking Issues & Challenges. IOSR J. Bus. Manag, 19(10), 31-39.

Gant, A. (2012). Effects of mobile banking on microfinance institution performance in Kenya. Georgetown University.

Gardachew, I. (2010). Perceived behavioural control, self-efficacy, locus of control, and the theory of planned behaviour. Journal of Applied Social Psychology, 32(4), 665-683.

Hannig, A., & Jansen, S. (2010). Financial inclusion and financial stability: Current policy issues. ABDI Working Paper No. 259.

Hendrickson, J. M., & Nichols, M. W. (2011). Troubling times for the commercial banker: Exploring the recent wave of failures. Journal of Applied Finance and Banking, 1(4), 1.

Hoque, M., Chishty, M., & Halloway, R. (2011). Commercialization and changes in capital structure in microfinance institutions: An innovation or wrong turn? Managerial Finance, 37(5), 414-425.

Kabiro K. M., & Maina, D. (2016). Effect of financial innovations on performance of microfinance institutions in Nakuru town, Kenya. IOSR Journal of Business and Management, 18, 43-49. DOI:

Karjaluoto, H., Mattila, M., & Pento, T. (2002). Factors underlying attitude formation towards online banking in Finland. International Journal of Bank Marketing, 20(6), 261-272.

Kaya, P. H. (2015). Joseph A. Schumpeter's perspective on innovation. International Journal of Economics, Commerce and Management, 3(8), 25-38.

Khatoon, A., & Ahmed, R. (2019). The impact of internet connectivity on financial inclusion: A panel study on Asian and African countries by using GMM. Econometrics Letters, 6(1), 1-26.

Kibaara, R. N. (2015). Effects of financial innovation on financial performance of MFI’s in Kenya (Unpublished Master’s Thesis). University of Nairobi.

Kimotho, M., & Muturi, W. (2019). Effect of innovation on financial performance of microfinance institutions in Kenya. International Journal of Social Sciences and Information Technology 5(3), 11-25.

Ling, M. G., Fern, Y.S., Boon, L. K., & Huat, T. S. (2016). Understanding customer satisfaction of internet banking. A case study in Malacca. Procedia Economics and Finance, 37(1), 80-85.

Mazambani, L., Rushwaya, T.J., & Mutambara, E. (2018). Financial inclusion: Disrupted liquidity and redundancy of mobile money agents in Zimbabwe. Investment Management and Financial Innovations, 15(3), 131-142.

Mersland, R. (2013). Market opportunities for microfinance institutions. Enterprise Development and Microfinance, 24(4), 282-249. DOI: 10.3362/1755-1986.2013.027

Mugo, M., & Kilonzo, E. (2017). Community-level impacts of financial inclusion in Kenya with particular focus on poverty eradication and employment creation. Nairobi: Central Bank of Kenya.

Mutsune, T. (2015). No Kenyan left behind: The model of Financial Inclusion through Mobile banking. Review of Business & Finance Studies, 6(1), 35-42.

Mutua, R. W. (2013). Effects of mobile banking on the financial performance of commercial banks in Kenya (Doctoral dissertation). University of Nairobi.

Nassiuma, D. (2000). Survey sampling: Theory and methods. Njoro, Kenya: Egerton University Press.

Nugroho, Y., & Miles, I. (2009). Global Review of Innovation Intelligence and Policy Studies, Mini Study 06 – Microfinance & Innovation. A Project for DG Enterprise and Industry. The European Commission.

Onyango, M.A. (2011). Strategic Responses of Kenya Commercial bank to mobile money transfer services in Kenya (Doctoral dissertation). University of Nairobi.

Porteous, D. (2006). The enabling environment for mobile banking in Africa. London: DFID.

Pradham, R. S., & Dahal, P. (2021). Effect of e-banking on financial inclusion in Nepal. International Journal of Finance, Entrepreneurship & Sustainability, 1(1), 33-41.

Quaye, D.N.O. (2011). The Effect of Micro Finance Institutions on the Growth of Small and Medium Scale Enterprises (SMEs): A Case Study of Selected SMEs in the Kumasi Metropolis (Masters’ Thesis). Institute of Distance Learning, KNUST.

Rosenberg, R., Gaul, S., Ford, W., & Tomilova, O. (2013). Microcredit interest rates and their determinants: 2004-2011. In Microfinance 3.0: Reconciling sustainability with social outreach and responsible delivery (pp. 69-104). Berlin, Heidelberg: Springer Berlin Heidelberg.

Safari, K., Bisimwa, A., & Armel, M. B. (2020). Attitudes and intentions toward internet banking in an undeveloped financial sector. PSU Research Review, 6(1), 36-58.

Srivastava, B. P., & Sherry, A. M. (2016). Demystifying Microfinance in Inclusive Growth. IPE Journal of Management, 6(2), 29.

Sullivan, R., & Wang, Z. (2014). Internet banking. An exploration in technology diffusion and impact. Working paper series. Retrieved from

Varga, D. (2018). Fintech, the new era of financial services. Budapest Management Review, 48(11), 22-32. DOI

Wambari, A. (2009). Mobile banking in developing countries (a case study on Kenya). Vaasan Ammattikorkeakoulu University of Applied Sciences.

Wilden, R., Gudergan, S. P., Nielsen, B. B., & Lings, I. (2013). Dynamic Capabilities and performance: Strategy, structure and environment. Long Range Planning, 46(12), 72-96.

World Bank (2016). World Development Report 2016: Digital Dividends. International Bank for Reconstruction and Development Washington DC: The World Bank.

Zogning, F. (2023). Financial inclusion, inclusive entrepreneurship and alternative financing options. Journal of Small Business & Entrepreneurship, 35(1), 8-13.



  • There are currently no refbacks.

Copyright (c) 2024 Florence Chemtai, Francis Omillo Okumu, Geoffrey Kiptum Kimutai

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Journal of Entrepreneurship and Business Innovation  ISSN 2332-8851

Copyright © Macrothink Institute 

To make sure that you can receive messages from us, please add the '' domains to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', please check your 'spam' or 'junk' folder.