Product Innovations and Financial Performance of Deposit Taking Savings and Credit Cooperative Societies in Nairobi City County, Kenya

As a component of the global cooperative system, consumer cooperatives in Kenya play a significant role in the execution of national social and economic policies. Financial institutions have adapted to change by taking advantage of the opportunities provided by information and technology. Financial innovations that are embraced by Savings and Credit Cooperative Societies (SACCOs) include the creation of new goods and innovative methods of product delivery to consumers. Consumer cooperatives in Kenya play a crucial role in implementing national social and economic policies, particularly through Savings and Credit Cooperative Societies (SACCOs). These financial institutions have adapted to changes by leveraging information technology to create innovative products and improve delivery methods. However, SACCOs face stiff competition from commercial banks and microfinance institutions. The study sought to investigate the relationship between financial innovations and the financial performance of SACCOs, focusing on their impact before, during, and after the pandemic. Utilizing panel data methodology, the study analyzed 45 registered Deposit Taking SACCOs in Nairobi City County from 2018 to 2022, employing secondary data to draw conclusions. The findings revealed a negative correlation between product innovations and financial performance, indicated by negative coefficients in Return on Assets (ROA). To SACCO effectiveness, the study recommends several strategies. It emphasizes the need for public education on internet banking and suggests that SACCOs develop more user-friendly, multifunctional products to better meet customer needs. Investing in information and communication technology (ICT) for process automation is also vital to streamline operations. Additionally, improving marketing techniques is essential to enhance customer experience, reduce wait times, and minimize inefficiencies. SACCOs are encouraged to adopt innovative financial strategies to boost overall productivity, profitability, and market share. The regulatory body, SASRA, should implement effective regulations and monitoring systems to support these innovations. Overall, the study highlights the importance of ongoing innovation and effective management in improving the financial performance of SACCOs within a competitive landscape.