Digital Channels and Financial Sustainability in Commercial Banks

The adoption of digital banking channels has gained significant importance in recent years. Although extensive research highlights the benefits of individual digital banking services, few studies have investigated their collective impact on bank performance, especially in developing countries like Kenya. This study examines the impact of digital banking channels, including Mobile Banking, Electronic Banking, Agency Banking, and Internet Banking, in promoting financial sustainability in commercial banks. The study employed the Technology Adoption Theory (TAT) in evaluating the relationship between digital banking channels and the financial sustainability of commercial banks in Kenya. The study used a quantitative research design with secondary data from Kenyan commercial banks between 2018 and 2023. Generalized Method of Moments and Ordinary Least Squares models were adopted to assess the relationship between digital banking channels and financial sustainability. The findings showed that all digital banking channels positively affect financial sustainability, with Mobile Banking having the most significant impact. The combined use of these channels provided even greater benefits, enhancing overall financial performance. The results also suggest that the benefits of digital banking accumulate over time, contributing to long-term sustainability. The findings contribute to the understanding of digital banking’s role in financial performance, offering insights for banks and policymakers in Kenya and other developing economies.