Knowledge Management in organizations has become an important strategic weapon for sustaining competitive advantage. Knowledge management manages the corporation’s knowledge through a systematically and organizationally specified process for acquiring, organizing, sustaining, applying, sharing and renewing both the tactic and explicit knowledge of employees to enhance organizational performance and create value. This study sought to investigate the effect of Knowledge Management on financial innovation in commercial banks in Kenya. The specific objectives of the study were to determine the influence of knowledge acquisition on financial innovation in commercial banks in Kenya, to examine the effect of knowledge transfer on financial innovation in commercial banks in Kenya and lastly to establish association between knowledge application and financial innovation in commercial banks in Kenya. The study used a case study of Chase Bank (IR) Kenya Ltd. It adopted descriptive survey design which adopted both quantitative methods to ensure a clear description of the outcome of the study results. The target population was 160 employees of Chase Bank (IR) branches operating within Nairobi County. The study used a sampling frame of branch and operational managers of the bank within the county where a mixture of simple/stratified random sampling method was used to select a sample size. They used a sample size of 114 respondents. Data was collected by use of questionnaire containing five sections namely background information, knowledge acquisition, knowledge transfer and knowledge application. The questionnaires were distributed by the research assistant to the selected respondents. Data was analyzed using SPSS software and was presented on graphs and pie charts for easy interpretation. The three independent variables that were studied, explained 66.9% on the knowledge management and financial innovation in Chase Bank (IR). As indicated by the adjusted R2 which was 65.9%. Knowledge application was found to significantly affect financial innovation. The study recommends that on knowledge acquisition, banks should ensure that they expose their employees to more platforms where they can acquire more knowledge so that they can enhance financial innovation since the study has found that the variable had the lowest correlation to financial innovation. Secondly, on knowledge transfer the management of banks should ensure that they create conducive environment so that employees can be in position of transferring the knowledge that they have acquired. Finally, on knowledge application, the banks should also create conducive environment that will ensure that the employees are able to apply the knowledge that they acquire.
