Kenyans return to banking halls despite digital shift


The Central Bank of Kenya in Nairobi. FILE PHOTO | NMG

The desire for human touch has seen banking customers troop back to branches, marking a shift from the digital transactional channels accelerated by the Covid-19 pandemic.

The 2022 banking industry customer satisfaction survey by the Kenya Bankers Association (KBA) released on Wednesday shows that the preference for branch banking spiked to 17.6 percent last year, shooting past the 2019 levels of 13 percent before the health crisis drove customers to mobile channels.

The preference for branch banking faded significantly in 2020 and 2021 as mobile, internet and online banking preference rates soared in the shadow of the pandemic which forced reduced physical interactions.

Despite the returning allure of physical branches, the preference for mobile banking has not waned as 67.8 percent of the survey respondents said they preferred mobile banking in contrast with a 58.4 percent preference rate in 2021.

Other banking channels have also registered increased usage with the preference for automated teller machines, cards, internet/online banking and agency banking rising to 16.85, 6.14, 23.33 and 6.06 percent respectively from 9.7, 1.8, 20.3 and two percent previously.

The rebounding appeal for bank branches has been largely attributed to the desire for human touch in banking services which has been reinvigorated by the end of Covid-19 related restrictions.

“There are customers who believe in still walking to a bank branch to conduct transactions. The pandemic had pushed some of these customers to digital banking,” said KBA Head of Research Samuel Toriongo.

The rebound of branch banking alongside the extended preference for digital banking solutions has left commercial banks at crossroads in deciding to make new investments behind either brick-or-mortar channels or digital platforms.

Prime Bank Head of Digital Banking Ashish Baghel says both channels will remain dominant splitting investments between digital and brick-and-mortar in the middle.

“At the end of the day, it is about attaining a mix of both. Some customers prefer technology while others want some human interaction and would want to hear a human voice,” he said.

“Say a customer has lost their card, a fully automated service has to have the same kind of confidence as human interaction would.”

Prime Bank says the usage of both branch and digital channels stands at 46 percent each informing the lender’s decision to keep a wide stance on delivery channels.

The bank which recently opened outlets in Baba Dogo and Kitale says physical branches remain pivotal to the recruitment and onboarding of new customers.

“The first interaction between a bank and a customer will always be with someone in the branch or head office,” added Mr Baghel.

Commercial banks have over recent months strived to strike a balance between expanding their physical footprint and going digital.

Last year, for instance, tier-one lender Diamond Trust Bank indicated it would open 17 new branches in an expansion drive that was estimated to cost Sh350 million.

On its end, Co-operative Bank had indicated it would open seven new branches in a move aimed at expanding its physical presence in areas where it sees an opportunity to grow its customer base with its CEO Gideon Muriuki arguing banking halls were here to stay.

“The emerging theory that bank branches and ATMs will cease to exist is largely wishful thinking driven by a desire to cut brick-and-mortar costs, and not by credible customer feedback on the service outlets through which customers prefer to be served,” he said.

NCBA also opened 12 branches across 2022 in a similar expansion drive. On the flip side, SBM closed five branches at the end of 2021 in a push to have customers embrace digital banking.

NCBA Group chief executive John Gachora whose entity now has 84 branches in Kenya says the quickest way to reach new regions in the country will still be through physical branches, even though the size and capabilities will be different.

“We are responding to the behaviours of customers. Customer behaviour is that they still want to know where you are located before they can open an account with you,” said Mr Gachora.

Further, Faulu Microfinance Bank closed six branches last year as it switched investments to digital banking services.

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