1. DIGITALIZATION AND SUPPLY CHAIN RISK AMONG COMMERCIAL BANKS IN KENYA
1Kennedy L. Voreza, 2Nancy M. Marika, 3Lilian K. Mogikoyo

2. Introduction
Banks in Kenya are changing their normal processes and are embracing new technology that is modern, effective and efficient.
Mobile phones, Computers and Automatic Teller Machines (ATMs) are the major platforms the banks are using to digitalize its operations.
This has provided a fast, convenient and a better experience to customers.

3. Digitilization
Digitalization is a process that involves adopting of emerging technologies in order to run their daily banking processes.
Digitalization of banks means the services of the bank are delivered over the web and any technological device that can allow transaction of services from the bank to the clients.
It has resulted to banks shifting into digital business that involve the uniting and use of different technologies into everyday banking life.

4. Supply Chain Risk
Fang et al, (2008) elaborates supply chain risk as disturbance in the flow of information and material goods from the supplier to the final product user.
Risk origins include environment, organizational or supply chain partner’s.
Supply chain risk is grouped into two major foundations- Micro risks and Macro risks.

5. Commercial Banks in Kenya
According, CBK’s directory there is forty-four commercial banks in the country.
The Kenyan banking sector has undergone many regulatory and financial reforms in the past. For example, last year the financial market was hit by the capping of interest rate law. Such reforms have brought in so important changes to the banking sector (Irungu, 2013). Hence the banks have to re-invent how they do business.
The banking sector is governed by the Banking Act (CBK, 2015).
Commercial banks in Kenya are required by CBK to submit audited annual reports, which include their financial performance and in addition disclose various financial risks in the reports including liquidity risk, credit risk and so on, as well as management of credit risk (CBK, 2015).

6. Theories
Technology Acceptance Model (TAM) model examines at the elements of consumer reception of end-user computer technologies. It explains ICT acceptance and its usage
It expounds on two theoretical ideas: Perceived Usefulness (PU) and Perceived Ease of Use (PEOU) that determine the adoption and the purpose to use of a technological system.
Scholars have confirmed that Perceived Usefulness has a positive connection with both adoption intention (Galera et al., 2011) and continuance intention (Romi et al., 2013).
Diffusion of innovation is the manner which the invention is transferred through networks over time among participants of social organizations.

7. Conceptual Model Independent Variables Dependent Variables
Digital Channels
Supply Chain Risk
System Interruptions
System Failures
Security Breaches
Internet Banking
Mobile Banking

8. Methodology
The study used descriptive research design. Cooper and Schindler, (2006) the design answers the questions such as who, how, what which, when and how much.
The study adopted a positivist research design hence it was keenly designed to ensure comprehensive explanation of the circumstances with minimal bias in the collection of data.
The population was all 44 Commercial Banks in Kenya. The study population is small; a census was appropriate.
Data collection instrument was a questionnaire. Section A contained the background information, Section B contained Digitalization Channels and the risk the channels brings to the banks and finally Section C covered the effect of digitalization on supply chain risk of commercial banks in Kenya.
The respondents were managers, I.C.T personnel and procurement officers.
Secondary data was used through looking at the bank’s annual and quarterly reports

9. Data Analysis
Section A - General information was analyzed using descriptive statistics.
Section C - Digitalization channels adopted by the commercial banks in Kenya was analyzed using descriptive statistics.
The effect of digitalization on supply chain risk of commercial banks in Kenya were analyzed using linear regression analysis where by the independent variables internet banking and mobile banking were analyzed against the depended variable supply chain risk which included elements like system failure, system security breaches and system disruptions and their causal effect.

10. Results
All questionnaires sent out were returned completed, a 100% response rate.
63.6% of the respondents were male while 39.4% were female.
56.8% were aged between years, 36.4 were aged between years & 6.8% were aged between years.
45.5% worked in Information Technology department, 31.8% in Procurement Department and 22.7% from Management .
The first objective was to assess the digitalization technology used in commercial banks in Kenya. 97.1% responded to a very large extent.
Many customers of commercial banks in Kenya regularly use phone to pay bills, 97.7% of the banks’ customers regularly use internet to make account inquiry, 97.7% use internet to regularly transfer funds between accounts, 72.7% make use of wire transfers, 43.2% use internet to process payroll and 22.7% of the commercial banks clients order check books online.

11. Results
Results showed that mobile phone applications, internet and ATM services are affected by supply chain risk through inability to get enquiries on time, system failures leading to late deliveries of customers’ needs, hacking by fraudsters, high costs incurred by customer use of digital services, IT security breaches, transaction delays and unplanned interruptions to a very large extent.
Mobile phone application had significant effect on supply chain risk.
Internet banking had significant effect on supply chain risk.
Use of ATMs had no significant effect on supply chain risk
The multiple R for the regression is 0.817, suggesting that there is a strong, positive correlation between the values that the model predicts and the actual values of the dependent variable. The R Square is 0.667, and this means that about 66.7% of the variation in the commercial banks supply chain risks can be explained by the variation in the extent to which they have attained digitalization. The Multiple R and the R Square suggest that digitalization affects the supply chain risks.

12. Conclusion
Conclusively, Kenya commercial banks have invested in mobile devices, phone and internet banking and use of ATMs and harmonized internal data to push financial technology.
Despite the fact that digitalization has positive effects to the banks and their clients, it also negatively affects supply chain risk through systems failure, hacking by fraudsters, IT security breaches unplanned interruption. Supply chains risks have an effect on the organization which include a loss of productivity; an increase in customer complaints; damaged brand and rising costs of business.
Therefore, banks should take supply chain risk management as a key function of the organization.