A report by the Sterling Capital analysts reveals that on average, Kenyans have reduced the numbers of debit cards transactions from thrice per month to just once per month. Preferring instead to transact via the mobile banking channels, currently spreading throughout the country.
Much of this shift can be attributed to the move by the Kenyan government to cap banking sector interest rates, forcing banking institutions to seek cost-cutting measures. Resulting in a push effect; driving more customers in search of alternative banking solutions such as the mobile banking services.
Stats by the Kenya Central Bank show 17.6 million card transactions in September 2016, compared to 33.9 million back in February 2013, during the inception of mobile banking. The cards include ATM, charge, prepaid, debit, and credit cards. The total value worth of card transactions dropped to Ksh 115.6 billion this year, up from Ksh 149.3 billion in February 2013.
While the monthly mobile banking transactions worth has more than doubled, with September 2016 recording 130.7 billion compared to 53.5 million in February 2013.
The sub-Saharan Africa banking report by Sterling Capital reads in part:
“The use of mobile technology to deposit and withdraw cash from bank accounts seems to have eaten into the usage of cards with usage that had previously peaked at approximately three transactions per customer a month in February 2013; the preceding month to the introduction of M-Shwari – dropping to one card transaction per month. Mobile transactions per customer remain upbeat at approximately four transactions per month.”
Commercial banks business has taken a hit by the government introduction of a customer loan rate cap and a deposit account rate floor in September 2016; seeing interest margin gain decline. Lenders are now preferring cost saving measures to protect their earnings.
A Sterling analysts says, “Mobile banking is proving to be the sector’s ‘gold’ with every bank running for it… over two thirds of the commercial banks have embraced mobile banking, which is the cheapest channel of providing banking services.”