Sarah Bochaberi Ong‘era, Job Omagwa


Financial inclusion has been a challenge in Kenya for the last three decades. This is because of the cost of financial services and the distance to bank branches in remote areas. Part of their approach to addressing these challenges is to address the delivery channel costs through increased use of offsite ATMs. Low-income people no longer need to use scarce time and financial resources to travel to distant bank branches. Since Automated teller machines transactions cost far less than transactions at the branch teller, banks can make a profit handling even small money transfers and payments. However, despite the adoption of automated teller machines in commercial banks, the performance of banks has been declining. The study sought to examine the role of automated teller machines on performance of commercial banks. The study was conducted in the month of July, 2016 and focused on selected commercial banks, that is, Equity bank Kenya limited, Co-operative bank of Kenya limited, KCB bank Kenya Limited and Family bank Kenya limited. The expectations from this study was to provide a clear way to the banks of what they ought to do to ensure that their operation is effective and that customers are satisfied and their financial performance is kept at bay. The researcher used descriptive research design. The study adopted purposive sampling whereby respondents targeted provided the information that was required. The study used both primary and secondary data. Primary data was collected using a questionnaire, while secondary data was collected from the audited financial statements for over a period of 5 years (2011-2015). Statistical Package for Social Sciences (SPSS) version 22) was used for purposes of analysis. Data was analyzed using descriptive statistics (Means, percentages and standard deviation) as well as regression analysis. The study revealed that automated teller machines influence the financial performance of the four commercial banks in Kenya. The study also found that automated teller machines provide services at low cost and are affordable and convenient, which increases utilization by customers and hence increase in revenue and profitability of the banks. To increase the utilization of automated teller machines, commercial banks should increase the number of automated teller machines in the country. To the customers, the findings of this study imply that they can access efficient, affordable and accessible financial services via automated teller machines. Therefore, customers do not need to line up in the banking halls to get financial services, which is time consuming, inconveniencing and costly.

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