Kenyan youths are favouring mobile money accounts over banks with nearly half of them not holding traditional bank accounts, a World Bank report discloses.
Forty-nine percent of youths have only a mobile account compared to 42 percent of older adults in Kenya as per The Global Findex Database published by World Bank.
The disclosure puts pressure on banks and similar financial institutions to structure products that will lure the young adults to them.
“In Kenya, 48 percent of older adults have an account at a bank or similar financial institution, compared with 41 percent of younger adults, for an age gap of 7 percentage points,” reads the report.
“Meanwhile, just 42 percent of older adults have only a mobile money account, compared with 49 percent of younger adults, for a similar age gap of 7 percentage points, but in the other direction,” it adds.
Mobile money accounts are popular because of access and ease of use. The report found that 80 percent of adults receiving private sector wages do so digitally underscoring the entrenchment of mobile money.
This resulted in an increase in the number of people holding their savings in mobile money accounts and a shrinking in those in banks or similar institutions which include Saccos and microfinance institutions.
Data from Global Findex Database showed the number of people exclusively using mobile money accounts to hold their savings had increased to 32 percent in 2024 from approximately 22 percent in 2021, as the number of those who exclusively saved with banks shrunk to an estimated 4 percent from eight percent over the same period.
Mobile money providers have developed products that offer interest to users who use their platforms for savings.
The use of mobile money to receive payment and save cash has resulted in increased use of digital borrowing platforms who hold the financial history of the users.
“In Kenya, the region’s pioneer in mobile money, 32 percent of adults —or 86 percent of formal borrowers— borrowed from their mobile money providers, including 25 percent of adults who borrowed only in this way,” reads the report.
Men however have a higher appetite for borrowing with the gap between men and women borrowers being 16 percentage points. School fees were identified as the main worry for men while women borrowing was largely driven by business expenses.
Kenyan banks have continued to report an increase in deposit accounts with the industry stating it had 94.6 million deposit accounts at the end of 2023. Both banks and mobile money platforms have more customers than the adult population due to people having multiple accounts.
Kenya has been a global trendsetter in use of mobile money transforming its economy away from cash reliance. Digital money has become an accepted mode of payment across all industries resulting in increased holding of disposable money in mobile accounts to facilitate payments.
Criminals have sought to capitalise on the increased use of mobile money by sending scam messages to more than half of phone users in the country. However most of those targeted by scammers do not fall for their lies with only two percent disclosing they sent money to the scammers.
