The Effects of Real Time Gross Settlement on Financial Performance of Microfinance Institutions in Nairobi County, Kenya

Abstract

Companies that do not innovate run the risk of being surpassed by rivals. The financial sector has been impacted by globalization and technological advancement. The banking sector is utilizing these developments to enhance client service and guarantee profits on these investments. The study's objective and purpose was to determine the effects of real time gross settlement on financial performance of Microfinance institutions in Nairobi County, diffusion theory anchored the research. Many researches have been carried out to understand the connection between process improvements and financial performance. However, few of the reviewed research have determined the effect of real time gross settlement on financial performance of microfinance institutions in Nairobi County Kenya. Thus the current study aimed to fill in this knowledge gap. Cross-sectional survey research approach was used with a sample of 12 management staff. A pilot study was conducted in Kilifi County to check on reliability and validity of data collection instruments with the used of SPSS to analyse data. Mean and standard deviation were used to determine descriptive analysis, whereas model brief, ANOVA, and coefficients of regression were used to determine regression analysis. Outcomes were presented using frequency tables. According to the correlation analysis, real-time gross settlement positively correlated with financial performance. The study concludes that the processes of the Microfinance banks have been automated to improve MFIs operations. The study concludes that the Microfinance bank uses Real time gross settlement to minimize risk related to high value payment settlements. Recommendations is that in addition to automating core processes, the Microfinance banks should make it possible for the clients to open accounts remotely and operate those accounts remotely as well.