Influence of Branchless Banking Services on Saving Practices in Informal Settlements of Kenya: A Case Study of Kibera

Banking in several developing countries has transcended from a traditional brick-and mortar model of customers queuing for services in the banks to modern day banking where banks can be reached at any point for their services. This can be attributed to the tremendous growth in mobile penetration in many countries across the globe including developing countries. This study investigates the effect of branchless banking services on the saving practices in informal settlement of Kenya. The study is motivated by the social economic trend in Kenyas population which has been varying consistently depending on the employment rate and the income levels. The study concentrates on the following independent variables i. e. trust and security, transaction costs, perceived convenience and Financial Literacy and how they have influenced the saving practices in informal settlements of Kenya. The analysis is built on a regression model where the relation between savings and a set of fundamental independent variables are investigated to examine the relationship between these two aspects. Primary data was collected using semi- structured questionnaires whereas Secondary data was obtained from written sources such as published and unpublished materials, reports, scholarly journals and periodicals, working papers, and records. A pilot study was done on the area of study in order to measure the validity and reliability of the data collection instrument. The study uses SPSS to model the relationship between the various selected variables and test their explanatory power on changes in savings practices. The study revealed that trust and security is an important element to low income earners and that they would only engage in services or even purchase of products that were most secure and those that possessed low level of risks. Expensive services also have been identified by this study as another factor that would greatly determine whether the subjects of this study would undertake the aforementioned mobile banking platforms or not. The study also established that convenience and financial literacy were not significant variables in determining whether informal settlement dwellers would prefer to use mobile banking services or not. Low effort expectancy can be said to be a benefit factor in the adoption of new technology and thus an important factor in explaining the usage of mobile banking.