- Group CEO James Mwangi said the lender is responding to a rapidly changing consumer lifestyle landscape that shows the era of physical contact with customers in banking is over.
Equity Bank has announced a freeze on the opening of new branches, marking the lender’s shift to digital banking services.
Chief executive James Mwangi said on Tuesday the bank had moved most of its services away from the traditional across-the-counter branches to online platforms.
The digital banking service will be supported by Equity’s new IT platform set up over the years at a cost of Sh20 billion.
Customers with the help of a mobile application will access services such as opening of new accounts, applying for loans and making utility payments via mobile devices.
Mr Mwangi said the bank has effectively reorganised its business model from a brick and mortar oriented lender to one that runs on digital channels.
“We have all witnessed how rapid adoption of mobile and other digital channels have transformed how people bank.
“Customers’ banking trends have declared the death of the bank branch as transaction channel as we know it, as they increasingly embrace self-service technology platforms that give them freedom, choice and control,” said Mr Mwangi during yesterday’s launch in Nairobi.
Kenyan lenders that have lately faced intense pressure to increase efficiencies and reduce costs by embracing digital services to compensate for thinning profit margins caused by new legislation and competition.
Mr Mwangi said customers’ changing lifestyles and a rise in disruptive financial technology innovations have pushed banks to strive to offer services in a non-traditional way by innovating convenient products and services.
“With our new services time has been removed from banking and geographical space compressed. This is the banking of the future. It is plug and play, and banking as we know it has been redefined,” he said.
Terming it a customer-led revolution which could possibly see banks that fail to innovate perish, Mr Mwangi said more than 80 per cent of all loans in Equity are now accessed through the mobile phone.
Equity’s automation could lead to staff cuts or slow down fresh recruitment for the lender, whose staff numbers declined by 660 last year in what the bank attributed to natural attrition.
Mr Mwangi, however, maintained that the digital shift would not result in staff lay-offs.
He said the bank would re-deploy staff to offer other support services. “It will result in zero redundancies, in any case we will require more staff,” said Mr Mwangi.
Several studies have urged banks to embrace digital technologies to counter the disruption from financial innovations.
A recent research report by SAP Africa for instance warned that failure to do so may expose them to a tough future marked by thin profits.
According to SAP while the digital revolution represents a threat to the incumbent banks, they should be wary of focusing on maintaining traditional advantages and rather think of utilising technology to create new opportunities across the entire value chain.
“The ability to embrace disruptive fintech products and services will allow banks to ride the wave of uncertainty and emerge strong and future fit,” said Darrel Orsmond industry head financial services at SAP Africa recently.