Abstract:
In the last decade, there has been a rise in the financial services’ demand. This has been
realized through various avenues, including: banks opening agency services in retail
trading outlets, mobile phones, automatic teller machines (ATMs), Point-of-Sale (POS)
and mobile banking among others. In many countries, banks are employing various
strategies to enhance financial inclusion to ensure that their performance is maintained by
reaching as many people as possible. This study investigated the effect of system lock -in
strategic positioning on financial performance of commercial banks operating in Narok
town in Kenya. Specifically, the study sought to: determine the effect of technology
adoption, low-cost strategy service features and exclusive distribution channels on
financial performance of commercial banks operating in Narok town in Kenya. The study
was guided by the systems, efficiency and positioning theories. Further, the study used a
cross sectional research design targeting all the commercial banks operating in Narok
town. This census approach was purposeful since the ten banks which provided both
qualitative and quantitative primary and secondary data which was not only appropriate
but also manageable. Data was analyzed using descriptive and inferential statistics;
Pearson correlation and multiple regression analysis. Findings from the study revealed
that, from the Pearson correlation coefficient; all the four independent variables had a
positive and significant relationship with the dependent variable. In addition, the multiple
regression analyses indicated that all the independent variables were significant at 5%
level of confidence. The study concluded that system lock-in strategic positioning:
Technology adoption, low-cost strategy, service features and exclusive distribution
channels significantly enhanced financial performance of commercial banks operating in
Narok town. The study recommends that Commercial banks that wish to enhance their
financial performance should consider lock- in strategic positioning strategy. The study
also recommends further studies incorporating other financial institutions and other
elements of system lock-in other than the four elements that have been covered in this
study.
