Effect Of Online Loan Technology On Individuals

Online loan technology is a service provided by financial institutions in cooperation with mobile phone operators. It allows customers with busy lives to conveniently do their banking using their phones anytime. It is about getting banking services to the unbanked, those who do not have bank access or bank accounts, and those who are at the bottom of the economic pyramid often living in remote areas. The study sought to determine the effect of online loan technology on individual. Cross sectional descriptive survey was employed in this case. The data collected was cleaned, coded and systematically organized in a manner that facilities analysis using the Statistical Package for Social Sciences (SPSS). Data was analyzed on the basis of the mean and the F test statistic was computed at 5% significance level. To test for the strength of the model and the effect of mobile lending on the financial performance of commercial banks, the study conducted an Analysis of Variance (ANOVA). From the regression model, the study found out that there were mobile lending variables influencing the financial performance of commercial banks, which are; interest rates, capital adequacy and liquidity. They influenced it positively. The study found out that the 5 independent variables that were studied which included Total Mobile Loan Applicants, Total amount of mobile loans, interest rates, capital adequacy and liquidity explain 47.4% of financial performance of commercial banks as represented by adjusted R2. The study therefore concludes that mobile lending positively and significantly affects the financial performance of commercial banks. The study recommends that policy makers consider mobile lending in their formulation of policies because of the technological developments and the expected switch from physical branch networks to technologically supported banking services.

Introduction

1.1 Background of the Study

Nowadays, loans and loans occur every day in human life. Everyone may have difficulty in needing urgent money. On the other hand, many people would prefer to invest in another project or in a person with a higher return interest, compared to a bank economy.

According to a recent report from the loan market, the use of online loans increased by 4.2% across the financial market. Following this trend, Zoan, one of the leading IT services companies, has attempted to enter the consumer credit market alongside Ok Perintä Oy, who has extensive professional experience in the field of debt and equity. credit. . After several discussions, Zoan Oy will answer the construction of the investment request and the online loan in the technical part, while Ok Perintä Oy will answer to check the customer"s income information, then give a credit score to each application.

According to the survey, considering that most users are middle-aged men, the application should be easier to use, both from the perspective of the borrower and the investor. In addition, more and more people prefer to use the phone and iPad to view the website. You must therefore consider the design of the response, which allows the automation of resizing according to the width of the device screen, even when the client changes horizontally. gesture and vertical gesture

1.2 statement of the Problem

A loan is a sum of money given to an individual or institution on the condition that it is paid for a given period of time with interest, and that serves as a payment for the use of money. There are several types of loans, such as loans, finances and mortgages. The manual lending and lending process is stressful, impractical and time consuming for both the lender and the borrower. It is necessary to automate as much as possible the loan processing process. The goal of this project is to design and create a loan automation application software that can capture the required loan data once, secure this information throughout the loan process and convert the loan information system. Previous hand in hand to obtain and grant loans in a less stressful computerized form, track people in the process, supervise and track loans granted to allow better flow and improve compliance, guarantee Information security Reduces the life of the loans, applies the appropriate interest to the loan and informs the person concerned of the evolution of his loan.

1.3 Purpose of the Study

The purpose of this study is to examine the effect of online loan technology on individuals. Specifically the study will:

Determine individuals level of patronage of online loan

Assess individual"s perception on the effectiveness of online loan

Determine the relationship between access to loan and saving habbit of individual

1.4 Significance of the Study

The study aims to help the finance sector take a comprehensive approach to online financial service delivery system. The study will also be of interest to public universities, higher education institutions, research institutes and individual researchers interested in online loan and will use the results for further research. This study will encourage researchers to identify the effectiveness and efficiency of the sector. The research will help individual public companies understand their position relative to the standard of their financial report.

1.5 Study Hypothesis

The study hypothesis is:

HO1: online loan are significantly effectiveness of online
H11: online loan are not significantly effectiveness of online

HO2: there is no significant relationship between access to loan and saving habbit of individual
H12: there is a significant relationship between access to loan and saving habbit of individual

1.6 Scope and Limitations of the Study

The study scope is limited to examining the impact of online loan and relationship between access to loan and saving habbit of individual. Limitation faced by the research was limited time and financial constraint

1.7 Organisation of Study

The study is grouped into five chapters. This chapter being the first gives an introduction to the study. Chapter two gives a review of the related literature. Chapter three presents the research methodology; chapter four presents the data analysis as well as interpretation and discussion of the results. Chapter five gives a summary of findings and recommendations.

Summary, Conclusions and Recommendations

5.1 Introduction

This chapter provides a summary, conclusion, recommendations for policy, limitations of the study and recommended areas for further research.

5.2 Summary of the Findings

The objective of this study was to establish the effect of effect of online loan technology on the individual bank financial performance. The study established that a strong relationship exist between capital adequacy and the financial performance of the commercial banks. This is based on the fact that capital is a major driver of the banks business. Capital is key especially when a bank is faced with adverse situations. The capital of the commercial banks is capable of creating liquidity this is based on the fact that the bank deposits are in most cases prone to bank runs due to the fact that they are very fragile. When the bank capital is greater, it is able to reduce, any chance of financial distress, which negatively affect the commercial banks in the long run. The main source and cheap fund for capital, adequacy comes from the adequate deposits, which will guarantee the commercials banks of risk free situations for example the market and operational risks which the commercial banks are exposed to. The mitigation of these risks is key because it will ensure the customer deposits are projected.

The capital adequacy is a major indicator of the internal strength of the commercial banks which will enable them to withstand any losses in cases of the occurrence of a crisis. The ratio of the capital adequacy has a direct impact on the profits of commercial banks because it determines its exposure to risks hence the financial performance. There was a negative relationship between liquidity and the financial performance of commercial banks. Liquidity is a major factor that determines the financial performance of commercial banks. It shows the capacity of commercial banks to be able to meet any obligations that are due and that is majorly of the depositors.

Interest rates were found to be positively related with the financial performance from the study. On average the interest rates which were charged by the commercial banks remained the same over the years. The trend of performance of the different variables under study which included total mobile loan applicants, total amount of mobile loans, interest rates, capital adequacy, liquidity and return on assets was captured by the descriptive analysis. The ANOVA was employed to determine how strong the model was in the analysis. Based on the analysis of the regression statistics, the research concluded that the five factors which include total mobile loan applicants, total amount of mobile loan interest rates, capital adequacy and liquidity affected the financial performance of commercial banks. The five independent variables were able to explain their influence on the commercial banks up to 47.4% and the rest is contributed by other factors not considered in this study meaning the model was significant.

5.3 Conclusions

From the study, a weak negative relationship was found to exist between total mobile loan applicants and the return on assets, the correlation , coefficient was found to be - 0.103 which was also not significant because the P value of 0.667 was found to be statistically insignificant (P>0.05). A negative relationship exists between total amount of mobile loans and return on assets, the correlation coefficient was -0.221 and again the relationship was not significant. The P value was 0.349 which is greater than 0.05. A positive relationship exist between interest rules and return on assets, because the correlation coefficient was 0.167 although the relationship was weak. This relationship was not significant (p>0.05).

The capital adequacy is positively related with the return on assets, the relationship was moderate. The liquidity of the commercial banks was found to be negatively correlated with the financial performance which was measured by the return on assets. From the descriptive statistics it was evident that the total mobile loan applicants have been increasing over the years. The total amount of loans transacted by the mobile phones has been increasing at an increasing rate for the years under study. Based on the data from the findings, on average the total amount of mobile loans has been increasing since the adoption of mobile lending by the commercial banks. The rate of interest charged by the commercial bank over the years that were studied remained constant over the years which were studied.

The capital adequacy of the commercial banks that were analyzed shows that on average, the capital adequacy posted mixed results. It shows that the amount of own fund that was available in supporting the bank"s business was changing over time. The ability of the commercial banks to meet its obligations posted mixed results from the findings of the study .The financial performance of the commercial banks posted mixed results over the years that were analyzed . There was no common trend for the financial performance.

Based on the outcome of this research, it concludes by saying that mobile lending contributes positively to the financial performance of commercial banks in Kenya. This is based on the fact that a number of variables studied proved the existence of positive relationship between mobile lending and financial performance and they included interest rates, capital adequacy and liquidity. This implies that interest rates directly affect the financial performance. The higher the interest rates the better the financial performance and the proportion of total capital to total asset is also another component that affect the financial performance. This is in agreement with Okumu (2013) who argued that stiff competition in the banking sector has led to emergence of alternative strategies like mobile lending to better the financial performance.

5.4 Recommendations

From the outcome of this research, the study recommends the adoption of mobile lending by the policy makers. This is based on the fact that due to technological advancements many business entities are switching from the physical branch networks to technology enabled networks due to the benefits associated with them. The effect of mobile lending can be made more significant if sufficient changes are made in terms of the adoption and full implementation of this technology. This study recommends the adoption of mobile lending because it support the bank focused theory which states that commercial banks can derive more benefits from adopting technologies such as mobile lending in the provision of services to their customers. Mobile lending is anytime banking since customers are able to transact anytime unlike the traditional normal banking procedures where customers must avail themselves into the banking halls or through the agency banking which is a waste of time

This study recommends the adoption of mobile lending, this new technology has increased the number of transactions undertaken by the mobile platform. Innovation is useful because it speeds up the work by ensuring maximum number of transactions are achieved. Commercial banks in Kenya which have adopted mobile lending have posted increased volumes of transactions.

The study recommends that all commercial banks in Kenya move with urgency by ensuring that mobile lending is adopted and implemented due to the benefits associated with mobile lending. From the findings of the study, only four commercial banks have fully adopted and implemented this mobile lending platform out of the possible 43 registered commercial banks in Kenya. This is also due to the fact that the population of people who can access the mobile phones are on the rise every single day.

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