Local banks are growing at breakneck speed but employing fewer people as artificial intelligence (AI) and other technology bring about the greatest transfer from labour to capital.
While the number of consumer deposits has surged by 44 percent in 2023 and 20 percent last year, jobs growth in Kenya’s banking sector slowed to 2.39 percent—the lowest since the peak Covid-19 economic hardships.
The job cuts in the industry would be felt most heavily in back offices, branches and call centres where staff numbers, notably clerical roles, are falling.
The banking industry will employ fewer people over time as machine learning and artificial intelligence take over how banks process payments and manage client finances, analysts say.
The Central Bank of Kenya (CBK) notes that technology is displacing banking jobs as innovation allows lenders to do more with less.
The adoption of mobile, agency and Internet banking has seen lenders reaching more customers without having to bend backwards to increase their staff count aggressively.
Banks spend more on technology than any other industry, and are expected to be at the forefront of adopting AI, which is taking banking jobs in the developed world.
The CBK assesses employee efficiency in the industry by measuring the mean number of accounts handled by each employee. In 2024, this number rose to 2,941 deposit accounts from 2,495 accounts previously.
By leveraging innovations to grow deposits, the CBK observes that both jobs and employee compensation in the industry are set to continue slowing down.
“The adoption of technology in the banking sector, such as mobile money, continues to moderate employment,” said the CBK.
“The number of deposits increased relative to the number of staff, while growth staff emoluments declined 14.3 percent in 2023 to 6.9 percent in 2024. The decline in staff emolument and adoption of technology reduced operational costs.”
Between 2010 and 2024, the number of staff in commercial banks grew by an average of just 2.82 percent annually, while growth in account holders averaged 19.6 percentage points in the same period.
This implies that commercial banks are attracting as many as seven new depositors for every single increase in staff.
The number of deposit account holders rose by 20.7 percent last year to 114.2 million from 94.6 million previously.
This was against a mere 2.3 percent growth in the number of staff from 37,933 to 38,840 in 2023.
But even with the increased staff levels, certain categories of jobs in the industry have benefited from extended hiring while others have faltered.
Banking channels
In 2024, the count of bank management level jobs jumped the highest by 8.2 percent to 12,407 roles from 11,469 jobs previously.
Secretarial jobs saw the second fastest growth at 6.4 percent, posting 314 new roles to 5,239 from 4,925.
Supervisory jobs were also recharged, growing by 4.3 percent to 9,025 from 8,657 roles in 2023.
Clerical roles were, however, on the short end of the stick as jobs in the category fell by 5.5 percent or 713 to 12,169 from 12,882 previously.
Banks state that their deposit mobilisation efforts are now led primarily by digital banking channels.
The quest for integrated services, as captured by customers in sector surveys, however, implies that commercial banks must still maintain some form of physical presence, which has helped sustain hiring through the branch network expansion.
“It is important to note that the sector’s deposit mobilisation efforts have been largely supported by the continued expansion of digital banking channels, including mobile banking, agency banking and internet banking, which have significantly improved customer reach and convenience, thereby accelerating deposit mobilisation,” the Kenya Bankers Association said in an industry report.
“The Banking Customer Satisfaction Survey 2024 has shown a growing demand for integrated digital solutions while maintaining the relevance of physical branches, underscoring the need for a balanced omni-channel approach that aligns with customer behaviour and expectations.”
Commercial banks still opened a record high 62 branches last year, the most in nine years, in a renewed drive to sign up more customers to boost their businesses, a move which served to increase employment in the industry.
The push towards digitisation and cost efficiency for banks has, however, been bittersweet.
While fewer hires mean billions of shillings in potential savings from salaries, rising cyber risks have taken back realised gains.
According to CBK, cybercriminals have become more sophisticated and better at infiltrating banking and payment systems, making away with billions of shillings in customer funds.
“The number of cyber threats, amount exposed, and amount lost more than doubled between 2023 and 2024,” says CBK without disclosing the absolute losses.
“The prevalent use of social media also continues to pose risk to financial stability through the rapid spread of rumours and misinformation, which reduces confidence in the financial system.”
