Financial technologies have caused disruptions in the financial industry enabling most financial institutions to pull in

unbanked people into access to financial products, while still maintaining the existing conventional customer base in what is

referred to as financial inclusion (Mader, 2018). Academic literature exists on the association between financial technologies

Tech) are the use of new technology and technology channels to complement the older financial service delivery systems

technologies that are used in the financial services sector or used to help firms manage the financial aspects of their business

of money and other measures of value. FinTechs work in various zones going from loaning to individuals, advanced portable

instalments, and virtual monetary standards (Osmani, et al., 2020). These zones can particularly affect the unbanked by

bypassing conventional financial controls in the formal banking sector and advancing financial services to those who need

the financial markets. FinTechs have proved that financial products and services of all sorts need to be seamlessly integrated

Financial inclusion is the pursuit of making financial services accessible at affordable costs to all or any individuals and

(Adaramola & Kolapo, 2019). Financial development is vital for the economic process, and financial inclusion especially

features equity also (Maina & Mungai, 2019). Other potential benefits of financial inclusion include improving efficiency and

targeting of state welfare programmes; and reducing corruption and terrorism more broadly, through better monitoring and

regulation of monetary transactions using digital technology (Adewoye, 2013). Financial inclusion aims at improving the use

of formal modes of payments, such as Internet payments, mobile payments and others by the populace. The empirical literature

has elaborated on measures of financial inclusion and has presented various proxies that can be adopted to quantify financial

inclusion. Financial inclusion has three components including access, usage and barriers (Wang & Guan, 2017). Access to

financial services is measured using various proxies such as the number of bank accounts, the number of bank branches (per

1000 population) and/or the number of ATMs per (1000 people). Weligama (2018) used the volume of credit and deposits to

GDP as a measure of the usage of banking services. In this research, the financial inclusion proxies will be the number of bank

sustainable economic development by improving wider rights to use financial services to the unbanked population in emerging

technologies by financial institutions and users that have enhanced access to financial products including account opening,

savings facilities, credit facilities and payment platforms. The growth of FinTech in Kenya has seen improved financial

internet banking among others. However, Kimiri (2018) noted that Kenya is still grappling with a high number of unbanked

populations. The majority of Kenyans are still not enjoying all possible financial services even with the explosion of financial

technologies. Access to credit facilities is still a challenge with few adults being banked. Furthermore, Credit reference bureaus

Kim, Zoo, Lee, and Kang (2018) evaluated the nexus of mobile financial services, financial inclusion, and development. The

findings revealed that mobile banking had a major impact on financial inclusion. Gorham and Dorrance (2017) established that

revealed that Internet banking improved financial inclusion by banking institutions in Kenya. ATM banking had a major direct

phones in delivering financial products enhance the chances of saving at the household level. Ouma, Odongo and Were (2017)

was however limited to one financial technology hence there is a gap in other financial technologies that may also have a role

in financial inclusion. Byegon, Cheboi and Bonuke (2019) showed that financial innovations have an intervening effect on the

link between behavioural factors and financial inclusion. Hence financial innovations like agency banking, and mobile money

introduced diaspora remittances and lending rate as control variables given that the two variables play a critical role in

The study was anchored on the theory of financial innovation Model and Financial intermediation theory. Silber (1983)

proposed the financial innovations theory that holds that the expansion of financial services by financial institutions is the main

rationale for seeking financial inclusion (Li and Zeng, 2010). The theory postulates that the reason for the innovations in

finance is the barriers present in the old model of commercial banking. The old model of banking is associated with

information asymmetry, the cost of running a physical bank and other operational costs (Blach, 2011). Innovations in financial

technologies are a basic drive of the financial system, which promotes the transformation of the economy and associated

economic advantage from the new technology that is revitalizing the financial sector (Sekhar, 2013). Financial innovations

characterize financial advancements by bringing forth better approaches for financial service provision to customers and

ensuring better rates of returns for financial institutions. Further, financial innovations lead to boosting the economy of a

social evils like cybercrime that takes advantage of innovations to make users of financial information worse off through loss

of money, information among other breaches (Miller, 1992; Palmer, 2015). The theory of financial innovations underpins the

the emergence of financial technologies that assist in financial intermediation that ensures those who have no access to

financial products can access them easily. Financial technologies that are a product of financial innovations are critical in

lowering information asymmetry; the cost of running physical banks and other operational costs hence reducing the cost of

The financial intermediation theory as advanced by Akerlof (1970) postulates that the financial intermediation process

includes economic units with surplus funds deposited with financial institutions who in turn lend the same funds to economic

an economic system practicable. However, the theory has some limitations regarding underpinning the current study. The

traditional criticism against the financial intermediation theory is that a massive number of financial assets are required for it to

hold except in special cases only (Allen & Santomero, 1997). However, with the current development of advanced methods of

option pricing and pricing models and the extension of these ideas on option valuation and other derivatives have served to

negate this criticism and weakness of the standard market theory of financial intermediation. The theory underpins the current

study by examining the contributions of financial intermediation to financial inclusion. Financial intermediation ensures that

those with excess funds are connected with those who need finances to start business ventures. The purpose of financial

Okiro and Ndungu (2013) examined the impact of mobile and internet banking in Kenya. The study established that

Ouma, Odongo and Were (2017) examined the connection between the use of mobile phones in providing financial services

revealed that accessibility and use of mobile phones in delivering financial products enhance the chances of saving at the

Kenya. Financial inclusion was measured by the number of accounts, number of branches, deposit value and customer base.

Mobile banking, ATM banking, agency banking and online had a major effect on financial inclusion. Kithinji (2017) was based

banking on the financial performance of commercial banks in Kenya. The study acknowledged that Internet banking has the

potential to transform financial services and the banking industry. The study adopted a descriptive research design and

descriptive statistics for analysis. The findings revealed that ROA in commercial banks in Kenya was on an upward trajectory

due to an increase in online customer deposits through Internet banking. In addition, internet expenses fees and commissions

increased to total asset ratio increased. Mulwa (2017) was limited to Internet banking and another study examining other

Gorham and Dorrance (2017) explored the potential for technological innovation within the money services sector, with a

positive outcomes for financial inclusion in developing and developed nations, and therefore the digital finances convenience

facilitates borrowers with incomes that are low and ranging is often additional vital to them compared to the larger expense

they will pay to amass the precise services from standard banks. Nevertheless, the analysis explains that despite the benefits of

digital finances, it faces some difficulties in money inclusion and stability. Kim, Zoo, Lee, and Kang (2018) evaluated the

nexus of mobile financial services, financial inclusion, and development. This research was a critical analysis of 54 academic

research papers. The findings revealed that mobile banking had a major impact on financial inclusion. Byegon, Cheboi and

Bonuke (2019) examined the intervening role of financial innovations on the link between behavioural factors and the

utilization of formal financial services among Micro enterprises in Kenya. The study adopted a descriptive survey where a

regression analysis where results showed that financial innovations have an intervening effect on the link between behavioural

its convenience, accuracy, usability, convenience, and easy interbank. Hence, digital finance in the form of mobile banking,

credit cards, Internet banking, and mobile wallets (apps) have a major influence on financial inclusion. Durai and Stella (2019)

was not carried out in Kenya hence may not be wholesomely adopted in Kenya. Sindani, Muturi and Ngumi (2019) examined

the causal effect link between financial inclusion and financial distribution channels in Kenya. Financial distribution channels

included Internet banking and ATM banking. Annual Secondary data was collected for a period of six years from 2012 to 2017.

Internet banking enhanced financial inclusion by banking institutions in Kenya. ATM banking had a major direct impact on

financial inclusion, and income inequality in a panel of one hundred and forty countries. The study examined the effect of

study was based on quarterly data for the period 2008 to 2018. A descriptive research design where employed in the research.

The study adopted a multivariate time series regression model. The research revealed that remittances from the diaspora had a

direct and major effect on financial inclusion. Arthur, Musau and Wanjohi (2020) was limited to the role of diaspora

inclusion including financial technology. Oyelami, Saibu and Adekunle (2017) revealed that low financial inclusion among the

poor masses is a hindrance to inclusive development in developing countries. The study therefore examined the determinants

literacy. The breadth of the study by Oyelami, Saibu and Adekunle (2017) can be expanded to include more variables of in line

Boro (2017) evaluated how financial inclusion was affected by mobile banking in Kenya. The study was based on an

analytical model with quarterly data collected from 2007 to 2016. The study adopted trend analysis and OLS regression

analysis with the results revealing that financial inclusion was affected by mobile banking transactions and mobile money

subscriptions through deposits. Boro (2017) was limited to mobile banking as one aspect of financial technology and another

extraneous variables that also influence financial inclusion. Senou, Ouattara and Houensou (2019) examine the effect of digital

technology on financial inclusion in West Africa. Data was sourced from the central bank of West African states. Digital

technology was captured by mobile phone penetration and internet usage. Financial inclusion was measured by the number of

bank accounts per 1000 adults, credit to the private sector as a ratio of gross domestic product and the ratio of deposits to gross

domestic product. The study adopted the Random effect and GMM model with the findings showing that mobile phone

penetration and internet usage had a major direct effect on financial inclusion in West African states both in isolation and

jointly. Senou, Ouattara and Houensou (2019) was based in West Africa and their domestication in the Kenyan context is

variables especially where the researcher has no control over the environment in which the variables are interacting (Saunders,

Lewis and Thornhill, 2019). The design enabled the researcher to evaluate the contribution of FinTech to financial inclusion in

(KNBS, 2019). The study adopted secondary macro data regarding study variables in Kenya hence no sampling was carried

from economic surveys by the Kenya National Bureau of Statistics. The data extracted was entered on data collection sheets in

will be exported to STATA version 15. Descriptive statistics was utilized to determine outliers and elaborate on study variables.

In Table 2, the deposits include savings and deposits made by the population in the banking sector including commercial

banks and deposits taking Sacco’s. Deposits had a mean of Ksh.931.24 billion for 40 observations. The standard deviation

showed that deposits in each quarter were spread around the mean with about sh.329.75 billion. The minimum deposit was sh.

standard deviation showed that mobile money in each quarter of the year was spread around the mean with Ksh.325.01 billion.

The lowest mobile money was Ksh. 240.77 billion while the highest mobile money was Ksh.1,661.40 billion. Point of sale

(POS) machines had a mean of 1,684,720 machines with a standard deviation of 877,180 machines around the mean. The

minimum number of machines was 518, 490 machines and the maximum number of machines was 3,502,100 machines.

Agency banking (AB) was the volume of transactions carried through the commercial banks and MFI bank agents. The mean

agency banking transactions was 85.75 million with a standard deviation of 54.15 million transactions around the mean. The

minimum agency banking volume of transactions was 2.19 million and the maximum volume of agency banking transactions

Diaspora remittances (DR) were the money sent back home by Kenyans working or doing business abroad. The mean

diaspora remittances was USD. 464.72 million with a standard deviation of USD. 184.48 million around the mean. The

number of subscribed SIM cards was 24.97 million while the maximum was 61.41 million subscriptions. The gross domestic

product (GDP) was the monetary value of all finished goods and services produced or offered within the Kenyan boundary.

The mean GDP was Ksh. 1,672.52 billion with a standard deviation of Ksh.676.50 around the mean. The minimum GDP was

Ksh.379.07 billion and the maximum GDP was Ksh.2,834.25 billion.” The number of bank accounts (NBA) was the accounts

standard deviation of 18.38 million bank accounts. The minimum bank accounts were 14.24 million and the maximum bank

The study performed various diagnostic tests to ensure that the regression model is robust for parameter estimates. The study

distribution has a kurtosis of 3 in what is referred to as mesokurtic. Values of kurtosis greater than 3 are referred to as

leptokurtic and values less than 3 are referred to as platykurtic. All values of kurtosis were near three hence, the data is said to

The study carried out OLS regression to establish the contribution of financial technology to financial inclusion in Kenya.

0.920) implies that model 3 explains 92% of the variation in financial inclusion (credit to private sector) hence financial

inclusion measured by credit to the private sector was positive and significant (β1 =0.390, t= 5.09 and p=0.000< 0.05). “The

effect of Point of Sale (POS) on financial inclusion (credit to the private sector) was negative and statistically significant (β2=

0.184, t= 5.46 and p=0.000< 0.05). The effect of agency banking (AB) on financial inclusion (credit to the private sector) was

positive and statistically significant (β3= 0.154, t= 6.07 and p=0.000< 0.05). The effect of diaspora remittances (DR) on