Study on Effects of Innovation on Banking Performance: A Case of Kenya's Banking Sector

The financial industry has experienced major transformations due to emerging technologies, globalization, financial technologies (Fintech) and growth in science. Following competitive nature in the banking industry, the study tries to find out the extent to which commercial banks in Kenya have adopted innovation for their continued existence. The study applies descriptive research whereby secondary annual data from Central Bank of Kenya and individual commercial banks extracted for analysis. The study applies Ordinary Least Squares (OLS) model. Date analysis through Eviews7 confirms a positive influence of innovation on banking performance. The study together with other empirical evidences on Kenya's commercial banks reveal that innovation is continuous, cuts across a firm and has to be in line with overall firm strategy, hence, need to extend the research to other financial institutions and other sectors like agriculture, tourism and SMEs, which contributes largely to Kenya's economy. The study highly recommends the government of Kenya to offer full support to financial institutions in adopting Fintech.