CBK interventions lift digital banking

Interventions by the Central Bank of Kenya (CBK) to support cashless transactions under the cloud of the COVID-19 pandemic have served to lift digital banking transactions.

This as banks note a significant increase in not just the volume of transactions on their digital channels but also the value of transactions.

On March 16 last year, the CBK eliminated charges for transfers between mobile money wallets and bank accounts alongside an increase on the daily limit for mobile money transactions to Ksh.300,000 with the measures now being a permanent feature.

According to the Kenya Bankers Association (KBA) 2020 customer satisfaction report published last week, banking customers have increased their digital experiences supported in part by improved linkages between bank accounts and mobile money wallets.

The utilization of mobile and internet banking channels remained largely unchanged at 52 and 23 per cent with Kenyans favouring the mobile channel due to convenience.

Meanwhile, the utilization of traditional channels such as branches and automated teller machines (ATMs) has been cut by nearly half.

“The value of transactions has gone up alongside volumes. Banks should position themselves to support customers in a changing environment. Banks should seek to leverage on their relationships with fintech’s either by merging or creating a similar environment within their establishments,” said KBA Chief Executive Officer Habil Olaka.

Banks have since earned a nod of approval from their customers as they begin scaling digitization with 92 per cent of clients indicating lenders have made effort to improve their service standards through leveraging digital channels despite COVID-19.

“In view of the COVID-19 pandemic and the response of the bank in terms of trying to support their customers in accessing financial services securely, the level of digitization has gone up. There has been quite some level of investing by banks after the pandemic hit to limit physical contact,” added Olaka.

While there are no official statistics yet on the cumulative growth of digitization in banking, individual banks have reported a notable rise in the new channels over the last year.

Equity Bank for instance reported 98 per cent of its transactions are now happening outside the bank as of September in contrast to 97 per cent in 2019.

The lender’s transactions from mobile and the internet hit 83 per cent from 77 per cent while branch transactions tumbled to a mere three percent.

59 per cent of the bank’s transaction value is now tapped outside branches from 50 per cent in 2019 with mobile and internet banking carrying 33 per cent of the transactional value from a lower 25 per cent.

KCB’s value of mobile transactions meanwhile hit Ksh.683 billion at the nine months stage from Ksh.454 billion while the number of transactions hit 182 million from 149 million.

Nevertheless, the CBK interventions have had the counter effects of cutting bank’s mobile revenue from the waiver of charges on transfers to mobile-money accounts.

For instance, KCB’s mobile revenues slacked to Ksh.6.02 billion from Ksh.6.94 billion.

On overall, KCB’s non branch revenue declined by Ksh.1.1 billion or an equivalent 13 per cent over the last year.