Retail banking in Kenya is becoming sluggish and unpopular

In Kenya today, ‘banking’ is quickly transforming from a place you go, to a thing you do on your Mobile Phone, and Equity Bank of Kenya is now on the forefront of this digital transformation.

A high rate of mobile penetration in Kenya has seen 97 percent of all its transactions happening outside the branch. Despite its vast network of branches countrywide, Equity CEO Dr. James Mwangi has revealed that branches are now handling only 3 percent of the lender’s total transactions.

The agents are simply bridges for customers to convert cash into digital money and vice versa.

Equity’s buffet of digital products is now becoming a key driver of non-funded income. This realization, therefore, means that the bank is now keen on a digital transformation strategy that may involve phasing out all its branches in favor of the mobile phone and internet banking.

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“Our customers have embraced virtualization, they have now accepted digital money,” Says Dr. James Mwangi.

Furthermore, 93 percent of all its loans are being carried out on mobile and by September, SME’s in Kenya will be able to access loans from the lender through the internet.

“We are reserving up to Ksh 20 Billion for asset financing for the private sector and more so SME’s” added Dr. Mwangi.

But that is just one bank, in hindsight, the digital wave is sweeping through all the 42 banking halls in the country. Barclays Kenya, for instance, noted that over 70 percent of its transactions are also happening outside the branch.

Its Timiza virtual banking platform also gained three million new customers despite a late entry into the fin-tech market and having existed for just one year.

These new developments means that the banked population in Kenya, overwhelming prefer digital channels, largely due to their efficiency, and banking incumbents will need to reinvent themselves to survive the restructuring of their industry.

Dr. James also revealed a plan by the bank, to replace all its network of ATM’s with new ones by October, just in time for CBK’s deadline for the new generation currency.

“We will be replacing all our seven hundred ATM’s countrywide at a cost of Ksh 1.8 Billion, with new ATM’s that leverage Near Field technology to be able to recognize individual customers,” he said.

“We are trying to speak to our Millenials, a customer will be able to initiate a transaction on their smartphone and in the event of a hitch, the customer will be able to complete the same transaction on these new ATM’s”.

He was speaking during the release of the bank’s half-year results announcement, where the bank posted a Profit after tax of Ksh 12 Billion, up from Ksh 11 Billion during a similar period last year, representing a 9 percent growth.

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