Absa Bank Kenya is looking to invest KES4 billion in technology infrastructure as the lender seeks to reduce operating costs and expand its market share in the digital financial services segment.

Data from the bank’s latest financial report indicates the firm has pegged technology investment for the current financial year at Sh4 billion, a 21 per cent increase from KES3.3 billion spent last year.

Absa Bank Kenya Chief Financial Officer Yusuf Omari said the increased technology spend is informed by gains in reduced operating costs and improved customer experience realised from previous investment cycles. 

“Looking at technological investments especially on the side of digital, core banking continues to be our main agenda and this year we have Sh4billion planned investment up from KES3.3billion invested the previous year,” he said.

According to Absa Bank Kenya’s financial report, the firm realised 71 percent digitization level, up from 65 per cent recorded last year. 

The lender has also seen its share in the payments segment increase from 8.1 percent in 2024 to 10.4 percent this year, with KES77 billion in new gross lending registered through its digital platform Timiza.

Currently, 94 percent of the bank’s transactions are going through alternate channels as opposed to brick and mortar branches with the bank’s cost to income ratio for the first half of the 2024/2025 financial year standing at 36.4 percent, down from 40 percent in 2022.

“Our cost to income ratio continues to be good and this is largely because of our digital agenda and we are starting to see significant percentages of our customers going to self-service channels,” said Absa Bank Kenya CEO Abdi Mohamed.

Last month the bank launched LaRiba Timiza, Kenya’s first fully mobile Shariah compliant banking platform and management remains bullish on the prospects of continued investment in several new technologies including robotics and process automation at both the front and back end.

This comes even as new fintechs, both local and global, continue to make a beeline for the country’s digital financial services sector looking to capitalize on the growing demand for financial solutions, especially in the household segment. 

Data from the Central Bank of Kenya, CBK indicates that the regulator licensed 53 Digital Credit Providers last year, up from 32 licensed the previous year bringing the total number of service providers to 85.

According to the CBK the average monthly value of mobile money transactions rose to KES724.8 billion last year, up from KES662 billion driven by increased mobile phone penetration and a growing mobile money agent network.

“Notably, the addition of 53,954 new active mobile money agents points to a rapid expansion of last-mile financial access, with entrepreneurs capitalizing on underserved or previously untapped market segments,” said the CBK in its latest industry report.

According to the CBK, 58 percent of commercial banks and 64 percent of microfinance banks introduced an innovative product in the credit, deposit and capital raising services segment.

“Application Programming Interfaces (APIs) have been adopted by most banks with a 79 percent and 64 percent adoption rate by commercial banks and MFBs respectively,” stated the CBK. 

“This was followed by Cloud Computing, Biometrics Technology and Big Data and Data Analytics with an adoption rate of 42 percent, 40 percent, and 40 percent, respectively across all banks.”

There have however been concerns raised over the standard of crucial safeguards including consumers’ data protection and cybersecurity resilience with several lapses recorded at major institutions in recent years.

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