Banking is rapidly changing from a place people go to, to something people do from the comfort of their own houses, workplaces …basically anywhere with internet or phone network.
Mobile banking was first pioneered by Co-Op Bank in 2004. At the time, the service only allowed customers to check their account balance, request statements and track the status of cheques, it did not facilitate actual transfer of money. That only became a possibility with the launch of the M-pesa mobile money transfer system by Safaricom in 2007.
M-pesa has drastically transformed the way the majority of Kenyans send and receive money, in the process generating billions of shillings in profit for Safaricom. Currently, most banks have adopted and integrated the M-pesa concept in their everyday services.
Most banks are also offering internet banking, where customers can transact their business on personal computers or smart phones in the comforts of their homes or offices. This is being achieved by banks partnering with local technology firms, in particular companies that facilitate on-line financial activities or e-payments.
Data released by the Central Bank in August 2012 revealed that the introduction of internet banking has resulted in a substantial increase in the amount of money being remitted by Kenyans living and working abroad, with an average of a hundred million dollars being remitted every month.
The Covid 19 pandemic has acted as a tailwind for the adoption of digital banking as cash handling was discouraged as one of the ways of containing the pandemic.
Between June 2019 and June 2022, Equity Group’s digital banking transactions through mobile and internet channels, Agency and Merchant infrastructure doubled from 330 million to 663.9 million while transactions on the Group’s own infrastructure of branches and ATMs declined from 25.3 million to 19.2 million
In their just released half year results, Equity and KCB saw 99% and 98% of their transactions happening outside their physical branches respectively.
CooP-Bank has successfully moved 94 per cent of all customer transactions from physical branch networks to alternative delivery channels.
Digital banking is however not only restricted to low-value transactions. In the first half of the year, Equity recorded growth in the value of digital transactions by over 400% to Kshs 4.4 trillion up from Kshs 1.2trillion while the value of branch and ATMs based transactions have grown to Kshs 1.7trillion up from Kshs 1.1 trillion.
Equity also grew its year on year personal internet transactions by 1,081% from 600,000 to 7.5 million transactions with the value of the transactions growing by 366% from Kshs 39.5 billion to Kshs 184 billion.
KCB grew its mobile lending by 23% to KShs 91 billion while total values transacted on the mobile were up 22% to 1.28 trillion. The values transacted on internet banking and merchant/POS terminals were up 102% and 50% respectively.
This performance boosted the KCB Group NFI ratio to 32.1% compared to 28.9% achieved in the previous year.
Year to date, we have disbursed 12.6 billion to MSMEs through our_ Mobile E-Credit solution. MSMEs are a critical part of economic recovery post-covid and contribute up to 16 per cent of our total loan book,” Coop Bank Group MD and CEO, Gideon Muriuki said.
In a KBA Banking Industry Survey released in February 2022 showed that shows that six out of every 10 bank customers (58.4 percent) preferred Mobile Banking, with another two out of 10 (20.3 percent) recording their preference for Internet/Online Banking. This is against 52 percent and 23 percent respectively, in 2020.
According to the KBA survey, the preferred digital banking features are: banking applications (26 percent), mobile banking (25 percent) and internet banking (11 percent).
