Artificial Intelligence (AI) And Financial Performance of the Financial Service Industry in Kenya

Abstract

This study evaluates the effect of Artificial Intelligence (AI) on the financial performance of Kenya’s financial services industry, with a particular focus on the banking sector. Drawing from global and local perspectives, the paper explores how AI technologies—such as chatbots, credit scoring tools, predictive analytics, and robo-advisors—are being deployed to improve operational efficiency, enhance customer service, reduce risk, and drive profitability. Anchored on three theoretical frameworks—the Technology Acceptance Model (TAM), Resource-Based View (RBV), and Innovation Diffusion Theory (IDT)—the research uses a desk review methodology to synthesize recent empirical studies and industry reports published between 2020 and 2025. Findings reveal that AI adoption significantly contributes to enhanced financial performance through improved service delivery, expanded financial inclusion, and streamlined decision-making. However, challenges related to data quality, regulatory compliance, algorithm transparency, and limited focus on non-financial impacts persist. The paper concludes that while AI presents transformative potential for Kenya’s financial institutions, its strategic implementation must be inclusive, ethical, and aligned with institutional capabilities to achieve sustainable growth.