INFLUENCE OF CUSTOMER VALUE PROPOSITION ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Abstract

Competition in the banking sector in Kenya has significantly increased in the recent years because of the changing modern customer’s needs that are unique, specific and dynamic. Reacting to this, banks are coming up with customer value propositions that customers would gain by banking with them and not their competitors. However, given the recent mixed performance in the banking sector in Kenya, its doubtable whether Customer Value Proposition influences Financial Performance of commercial banks in Kenya, hence a need for the study in establishing the influence of functional value proposition, economic value proposition, symbolic value proposition and superior value proposition on financial performance of commercial banks in Kenya. A descriptive research design was used and the target population was a census on the entire number of 40 licensed commercial banks as at 2020 where operations, retail banking and finance managers were targeted from each bank. Both primary and secondary data were used in analysis which indicated that functional value proposition (? = 0.139, P-value < 0.05), economic value proposition (? = 0.155, P-value < 0.05), symbolic value proposition (? = 0.151, P-value < 0.05) and superior value proposition (? = 0.242, P-value < 0.05) have a positive and significant influence on financial performance of commercial banks in Kenya. This implies that an increase in adoption of these value propositions would lead to an increase in financial performance of commercial banks in Kenya significantly. The study recommended a need for the commercial banks to scan through their environment, understand the customer needs then revise their value propositions to attract more customers.   

Keywords: Economic Value, Functional Value, Symbolic Value, Superior Value, Financial Performance