The Impact of Digital Technologies on the Effectiveness of Internal Audit Function in Commercial Banks in Kenya.

Abstract

This study is set out with the general objective of establishing the effect of digital technologies on the effectiveness of internal audit function in commercial banks in Kenya. The research is guided by the following specific objectives; to determine the effect of artificial intelligence on the effectiveness of internal audit function in commercial banks in Kenya; to determine the effect of cognitive technology on the effectiveness of internal audit function in commercial banks in Kenya; to determine the effect of data analytics on the effectiveness of internal audit function in commercial banks in Kenya; to assess the effect of robotic process automation on the effectiveness of internal audit function in commercial banks in Kenya; to determine the joint effect of digital technologies (artificial intelligence, cognitive technology, data analytics and robotic process automation) on the effectiveness of internal audit function in commercial banks in Kenya. The research employed descriptive research design. The target population for the study was all the 39 licensed commercial banks in Kenya. A census of the population was used in this study. Primary data was collected using closed questionnaires. Descriptive and inference statistics were used to analyze the data with the help of Statistical Package for Social Sciences (SPSS) Version 23 programme. Pearson correlation was used to establish the strength of the independent variable on the dependent variable. Regression (Simple and multiple) analysis was used to establish the effect of the independent variable on dependent variable. The data analyzed was presented in the form of tables, pie charts and graphs. The study examined the effect of digital technologies artificial intelligence (AI), cognitive technology, data analytics, and robotic process automation (RPA) on the effectiveness of the internal audit function in commercial banks in Kenya. The findings indicated that AI and RPA had a positive and significant impact on internal audit effectiveness, whereas cognitive technology and data analytics did not have a statistically significant effect. However, when analyzed jointly, all digital technologies had a significant and positive joint effect on internal audit effectiveness. Develop comprehensive digital transformation strategies: Banks should take a holistic approach in implementing digital technologies to maximize their combined impact on the internal audit function. Regulators should develop policies that guide the ethical and effective use of AI and RPA in internal audit functions. The government and regulatory bodies should incentivize banks to integrate digital technologies to improve transparency and efficiency in auditing.