Banking industry see uptake of digital products

Many banks have launched and popularized the use of mobile applications, which have taken over some of the banking functions previously done in the banking halls. It is not surprising that customers can now carry transactions at the comfort of their homes or offices through mobile and online banking. 

Mobile apps gave some bank customers a new, and preferred digital option for carrying out transactions thanks partly to Covid-19. And the trend is backed by latest research from Kenya Bankers Association (KBA) on customer satisfaction which shows that the future is digital banking. More than a fifth (21.2%) of the customers surveyed singled out Family Bank as best in digital experience and banking features, followed by Standard Chartered Bank (16.9%) and Equity Bank (13.7%). 

Other top service providers included NCBA Bank (11.5%) and Diamond Trust Bank (6.8%). It is interesting that Standard Chartered Bank that topped in 2020, moved to the second position as Diamond Trust Bank moved back two positions. A new entrant, Equity Bank, featured strongly in the 2021 survey, after missing out in the top three in 2020.

“The trend shows that while there is a general increase in preference for automated transactions, human contact is still largely preferred by bank clients in customer service support,” the KBA survey said.

Both the 2020 and 2021 surveys continue to support the fact that a bank’s performance on the digital experience front is less dependent on its size. Customers were also asked to indicate their most preferred digital banking features. Most of the respondents (26%) cited banking applications, followed by mobile banking at 25% and Internet banking at 11%.

The choice of banking applications is attributed to two main factors. First, many banks have launched and popularized the use of versatile banking apps, which have taken over some of the banking functions previously done by customers through Mobile and Internet Banking. 

The survey also established that, on average, nearly six out of every 10 bank customers (58.4%) prefer mobile banking – they typically use their mobile phones’ USSD-based systems to conduct their banking. This is followed by those who prefer Internet, or online banking at 20.3%, with the preference for the use of Automatic Teller Machines (ATMs) – ATMs represented by 9.7% of the sampled customers.

Banking applications are the topmost preferred digital banking feature, cited by 26% of the respondents, followed by mobile banking at 25% and Internet banking at 11%. The preferred mode of interaction when accessing banking services was fully automated or self-service modes, as reflected by 46.7% of the respondents. 

Indeed, COVID-19 continues to define the conduct of business, and that includes the delivery of banking services in the country. However, its pre-eminence has softened, as businesses assemble post-pandemic experience. In the recently released Allianz Risk Barometer 2022, pandemic outbreaks ranked fourth as a business risk factor, compared to 2021 when it made second place. 

Notably, the pandemic has accelerated the adoption of digitization. This Survey shows that six out of every 10 bank customers (58.4%) preferred mobile banking, with another two out of 10 (20.3%) recording their preference for Internet or online banking. This is against 52% and 23% respectively, in 2020. 

One of the major revelations in this survey is the emergence of the Banking App as the most preferred Digital Banking feature, ahead of Mobile Banking and Internet Banking.

But increased digitization has come at a cost – the tales of cyber threats and fraud are emerging as a major downside. In the Allianz Survey, cyber threats emerged as the top-ranking threat. Mitigating fraud makes a great contribution towards protecting financial inclusion. 

“Sustained sensitization efforts such as the banking industry’s ‘Kaa Chonjo!’ campaign will go a long way in creating awareness of financial fraud and mitigation measures,” the survey noted.

Multi-banking

The practice of having more than one bank account, better known as multi-banking also appears entrenched among Kenya’s banking clientele. In 2021, at least six out of every 10 Kenyans (62%) had two to three bank accounts, lower than the nearly eight out of 10 (77%) observed in 2020. And it is not by chance. 

The signs were all there even before the Covid-19 pandemic. This is perhaps reflective of the declined economic activity and thus incomes as a result of the effects of the pandemic. So customers were forced to consolidate funds to reduce running costs associated with maintaining bank accounts.

It is evident that while 25.2% of the respondents had just one account, 11.4% had four to five accounts and 1.4% had six accounts or more. This is compared to 23% (one account), 12 % (4-5 accounts) and 1% (6 and above accounts), respectively, in 2020.