Successful organizations recognize the importance of firm capability and realize that their survival is dependent on how well they respond to the changes in the business environment. This study sought to establish the impact of firm capability for competitive advantage in the banking industry in Kenya. To accomplish this objective, data was drawn from 129 respondents from the senior management of the 43 commercial banks in Kenya (as at 31st December 2016) who were targeted as the principal respondents. A self-administered questionnaire was used as the major tool of data collection to capture data on managers' opinions on capability development at commercial banks ensuring competitive advantage is attained. Descriptive research design and regression analysis was preferred for analysis and presentation of findings. In this case, data was evaluated and presented in form of textual/content analysis. The study sought to establish the effect of firm capability (financial capability, marketing capability and technological capability) on the competitive advantage of commercial banks. Primary data was collected from top, middle and lower level managers of the commercial banks using semi-structured questionnaires. The collected data was analyzed using descriptive statistics such as means and standard deviations. The results of the study were presented in tables and figures and then compared to existing literature. The relationship between firm capability and competitive advantage was tested using regression analysis. Goodness of fit of the regression model to the data collected was tested using analysis of variance (ANOVA). The study established that the top, middle and lower level managers of the commercial banks strongly agree that financial capability, marketing capability and technological capability allow commercial banks to achieve competitive advantage. Regression analysis revealed that there is a strong relationship between competitive advantage and firm capability evidenced by an R-value of 0.717. The study also found out that firm capability accounts for 51.4% of the total variance in banks competitive advantage. The study recommends that commercial banks in Kenya should focus on improving their financial capability through tight budgets, overhead cost control and cost minimization in several areas such as service, sales, marketing and research and development. Banks should also enhance their technological capability if they are to enjoy competitive advantage. The main limitation of this study was the use of a questionnaire as the only data collection tool. Future studies with additional resources could attempt the cross- verification by use of multiple sources and further extend the study.