The banking sector in Kenya has benefitted from the advancement of information solutions that has shaped the operational processes. Kenyan banking sector has adopted the use of self-service technology (SST) as a tool of increasing the efficiency and effectiveness in most business processes leading to an increase in sales, profits and relative growth in market share of most companies. The aim of this study was to determine the effect of SST on operational performance of commercial banks in Nakuru County, Kenya. The specific objectives of the study were: to establish the effect of automated teller machines (ATMs) usage on operational performance of the banks, to examine the effect of Internet banking on operational performance of the banks and to determine the effect of mobile banking on operational performance of the banks.The study employed correlational-cross-sectional survey design. The target population comprised 31 of the commercial banks. A sample of 28 commercial banks was used in the study. Primary data was collected using structured questionnaires from operations and IT managers. The questionnaires were self-administered. The data collected was analyzed using SPSS version 20. The data was summarized using frequencies, means and standard deviations. The research hypotheses were tested using Pearson Product-Moment correlation and multiple regression. The study revealed a significant positive relationship between automated teller machines usage and operational performance, the study also revealed a significant positive relationship between internet banking and operational performance; further the study also revealed a significant positive relationship between mobile banking and operational performance. The findings revealed that the combined effect of SST on operational performance was significant. The findings also revealed that among the SST, mobile banking had the greatest relationship with operational performance. The study therefore concluded that SST positively and significantly influences operational performance of commercial banks in Nakuru County. The study recommends that while mobile banking is the key technology to be invested in by the commercial banks, all the SST should be invested in for a greater improvement in operational performance. The study suggests that further studies should be conducted to relate SSTs with other variables like quality and flexibility which are not captured in the study.

Background of the Study 
In today‟s contemporary business environment, the need for self-service technology cannot be overemphasized. Self-service is the process by which consumers engage in all or a portion of the provision of a service or product (Castro, Atkinson, & Ezell, 2010). According to Meuter, Ostrom, Roundtree and Bitner (2000), self-service technologies (SSTs) are technological interfaces that enable customers to produce a service independent of direct service employee involvement. Examples of SSTs include automated teller machines, automated hotel checkouts, banking by telephone, and services over the Internet such as Federal Express package tracking and online brokerage services. Today, our lives have become digital and dependent on technology since we are interacting with different kinds of technologies to fulfill different kinds of tasks in our daily lives. Some of these technologies have become more important in our lives more than others like computer, Internet and mobile phones. Self-service technologies are viable for banks and other financial intermediaries because information processing is essential to their services. Technology increases the efficiency and effectiveness in most business process leading to an increase in sales, profits and relative growth in market share (Charles, 2015). 

Sewpersad (2010) defined Automated Teller Machines as computerized telecommunications device that provides the customers of a financial institution with access to financial transactions in a public space without the intervention of a human clerk or a bank teller. The banking industry adopted the ATM concept for reducing costs and providing better services for the customers. The first ATM was installed in the early 1967 by Barclays bank in London, UK. The banks started installing ATM machines in the bank buildings first where a cash dispensing machine was not linked to the account directly. With the spread of Internet connectivity, the ATM machines have become a part of the urban landscape and available at parks, shopping malls or airports with many more services on offer than just cash dispensing (Abdelaziz, Hegazy, & Elabbassy, 2010). 

Pikkarainen, Pikkarainen, Karjaluoto and Pahnila (2004) defined Internet banking as an Internet portal, through which consumers can use different kind of banking services ranging from bill payment to making investment, thus banks just offering information through their websites are not considered as using Internet banking. Thulani, Tofara and Langton (2009) defined Internet banking as the systems that enable bank customers to get access to their accounts and general information on bank products and services through the use of bank‟s website, without the intervention or inconvenience of sending letters, faxes, original signatures and telephone confirmations. It is intended to customers easy access to their money and other banking information while adding more value such as convenience. 

According to Adewoye (2013), mobile banking is becoming more popular in modern banking and as such has been a subject of interest among researchers. Mobile banking means a financial transaction conducted by logging on to a bank‟s website using a cell phone, such as viewing account balances, making transfers between accounts or paying bills. It is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as mobile phones. In recent time, mobile banking is most often performed via Short Message Service (SMS) but can also use special programs called clients downloaded to the mobile device. According to Ensor et al. (2012), mobile banking refers to using mobile devices to provide financial information, communication and transactions to customers such as checking account balances, transferring funds and accessing other banking products and services anywhere, at any time. 

Birech (2011) contended that there are various performance measures that are within operations area. These are: standard individual performance measures include: productivity measures, quality measures, inventory measures, lead-time measures, preventive maintenance, performance to schedule, and utilization. Specific measures are as follows: Cost of quality – this is measured in terms budgeted versus actual, variances –this is measured in terms of standard absorbed cost versus actual expenses, period expenses – this is measured in terms of budgeted versus actual expenses, safety –which is measured on some common scale such as number of hours without an accident, and finally profit contribution which is measured in dollars or some other common scales. There are many different ways of measuring operational performance. However, the most predominant approach in the literature is to use cost, quality, delivery, speed, reliability and flexibility as the basic dimensions of operational performance (Agboola, 2003). 

Commercial Banks in Kenya 
Banking in Kenya started in 1896 with National Bank of India opening its first branch. Standard Chartered opened its first branch in Mombasa and in Nairobi in 1911. KCB was established in 1958 with Grindlays Bank of Britain merging with National Bank of India. The Co-operative bank of Kenya was established in 1965 with the aim of supporting co-operative societies financially three years after National Bank was incorporated (Ongori, 2013). According to Central Bank of Kenya (2014), as at 31st December 2014, the banking sector in Kenya is composed of the Central Bank of Kenya, as the regulatory authority, 44 banking institutions i.e. 43 commercial banks and 1 mortgage finance company, 8 representatives of foreign banks, 9 microfinance banks (MFBs), 2 Credit Reference Bureau (CRBs), 13 Monetary Remmitance Providers (MRPs) and 87 Foreign Exchange (forex) Bureaus. Of the 44 banking institutions, 30 were locally owned banks composed of 3 with public shareholding and 27 privately owned while 14 were foreign owned. The 9 MFBs, 2 CRBs, 13 MRPs and 87 forex bureau are all privately owned. Of the 14 foreigned owned banking institutions, 10 are locally incorporated subsidiaries of foreign banks and 4 are branches of foreign incorporated banks. Further, 11 out of the 44 banking institutions are listed on the Nairobi Securities Exchange. 

Githinji (2013) argued that in the past, firms did rely on mails and letters for delivering and receiving information from their branches or associate businesses across the world. This trend is good at that time but in a constantly changing environment; the firms find that the method of communication is not the best since it was bringing business down or slowing operations because of time. Therefore, some firms resort to increasing budget in the communication department and cutting expenses on other departments that are seen as less important. Today‟s business environment is very pogressive and undergoes rapid changes as a result of technological innovation, increased awareness, and demands from consumers. Organizations, especially the banking industry of the 21st century operate in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate (Agboola, 2003). 

Malenje (2014) argued that there is no rational or deliberate approach to deployment of ICT resources in the university. Individual users or departments make requests for workstations and Internet connectivity according to their needs. Using this kind of avenue of acquiring ICT resources, corporate needs may not be realized. He further observed that, though effort has been made to invest in ICT resources, evidence indicates that the desired results of effects have not been realized. Employees who are expected to implement the automation still perform their duties traditionally. However, the same employees use ICT resources to do their private work. He further, contended that the rapid development of information and communication technologies (ICT) has resulted in expanded availability of the latest technologies at a very affordable cost. 

Mbugua (2011) argued that there is laxity in times of system failures leading to more downtime. In conclusion, the following are observed as a result of the automation process; Not all users are computer literate hence a lot of training was compulsory, rigid policies that do not favor the ICT uptake e.g. some tasks being done manually due to the inculcated culture, there lack proper training to staff prior to uptake, retrenchment, change over problems due to inadequate training, downtime in cases of system failure and skills/knowledge gap among the staff. 

According to Githinji (2013), many organizations have been pulled into the style and fashion of technology. Sadly, this has proved counterproductive as they have adopted technology for the wrong reasons. After much cost, time and labour hours, many companies have not realized the benefits they set out to achieve from the initial start. Bill gates rightly captures this when he said that the first rule of any technology used in a business is that automation applied to an efficient operation will amplify the efficiency and the second rule is that automation applied to an inefficient operation will amplify the inefficiency. Sanda and Arhin (2011) argued that there is a high degree of customer complaints with ATMs downtime, cash out, high charges and sometimes, poor service recovery efforts when customers have problems. 

Olatokun and Igbinedion (2009) argued that banks still have many customers transacting with tellers within their doors, and queues are still not a thing of the past inside the banks. The aim of ATMs is also not well defined and sometimes long queues are observed outside the ATMs, while at other times, there are few or no customers. It is consequently momentous to discover why this is so, because as a technology ATMs, Internet banking and mobile banking are suppose to make life easier and more efficient for the customers of the banks such that they do not need to be there physically in the bank halls as opposed to what is found in every bank where there are long queues of customers waiting to be served.

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Item Type: Kenyan Topic  |  Size: 60 pages  |  Chapters: 1-5
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