Effect of bank innovation on financial performance of the universal banks in Ghana

Abstract

Innovation is a household term in businesses. Innovation aid in performance. The banking industry is one of the most dynamic sectors in any economy, as it plays a vital role in the financial intermediation process. Banks are important players in the economy as they mobilize funds from surplus sectors of the economy and channel them to deficit sectors for investment purposes. The purpose of the study was to identify the effect of bank innovations on the financial performance of the Ghanaian Universal Banks. The study adopted the descriptive survey design and purposive sampling technique to sample 15 Universal Banks for the sample frame. Based on the inclusion criterion set, a sample size of 250 participants were drawn from these banks for the study. The participants were banking staffs. The staffs were made up of both junior, senior staff and senior members of the 15 selected Universal Banks. The instrument for the data collection were self-designed survey questionnaire. The questionnaire was deployed to all participants electronically using Google forms. The data were coded and analysed using tables, frequencies, percentages and bar graph whereas path analysis was carried out to evaluate causal relationship between the dependent variables and independent variables with the aid of SPSS software Version 20. The findings reveal that banks that effectively respond to customer demands for digital innovations tend to achieve higher customer satisfaction and, subsequently, increased profitability. Another finding revealed the challenges including, customers being resistant to change, preferring to stick with the familiar products and services they are accustomed to. Additionally, customers may be hesitant to use new innovations if they perceive them as risky or insecure. Despite the challenges, implementing bank innovations also presents opportunities for banks. One significant opportunity is the potential to attract and retain customers. The study recommends among other things that in recognition to the impact of internal factors such as organizational culture and management support on innovation adoption, there is a need for universal banks to cultivate an organizational culture that values innovation. Additionally, implementing robust change management strategies will help address resistance from employees and ensure a smooth transition to innovative practices.