Abstract:
The aim of this study was to investigate whether there is a significant impact of cyber-crime related costs on the development of banking products that is financial innovation by Kenyan commercial banks. Given the fact that the cost of doing business under the new ever changing information communication and technology platform, the question was whether these costs are deterring banks from operating in this new risky environments and platforms or to what extent are these affecting the rate at which banks are developing new ideas and products that are transacted on an online platform. The research proposal adopted four independent variables to help estimate these effect which include prevention and detection costs, response costs and indirect costs and the rate of developed financial products as the dependent variable. The study used a questionnaire where it was administered to establish the effect of these factors. The respondents/ population of this research proposal was 957 bank employees, inclusive of 167 support staff, at NIC bank of Kenya. The study used a case study of the NIC bank of Kenya through purposive. A sample of 10% out of the bank employees minus the support staff gave a sample size of 80 respondents. The interview guides was to be self-managed to allow for convenience and reliability of the data. A pilot study was done on the area of study in order to measure the validity and reliability of the data collection instrument. The study adopted a descriptive research design where SPSS was used to model the relationship between the various selected variables and test there explanatory power. After the analysis the data was presented through the use of various presentation tools such as graphs pie charts and tables. The study analyzed and observed that prevention and detection costs such as insurance fees and IT compliance costs have an influence on development of banking products but were not significant. The other costs, direct costs, such as cost of business continuity direct financial loss, compensation payments, legal costs and indirect costs such as reputational damage and loss of confidence by customers were huge concerns and very significant influencers of development of innovated banking financial products and services. Therefore based on the study findings, the study recommends that developed banking products and services are becoming quite popular in the market and also very significant to all consumers, therefore banking service providers should consider providing novel technologies that are costs effective on the consumer and also on the bank operations
