Why Kenya’s top banks are renewing bet on retail market


I&M Bank Limited Kenyatta Avenue branch. FILE PHOTO | DENNIS ONSONGO | NMG

Top banks in Kenya have spent years deepening their foray into corporate banking and wealth management. Now they are going back to where it all started — retail banking.

Retail banking, also known as consumer or personal banking, is catching the attention of lenders such as Standard Chartered Bank Kenya, Absa Bank Kenya, Stanbic Bank, NCBA and I&M Bank as they move to recruit the next generation of customers.

The approach is seen as a way of securing the next set of customers to grow with, amid talk that the Kenyan market is nearing maturity. The lenders see the mass market as a good hunting ground for new customers, especially the young population entering the financial system.

This is part of the reason nearly all top banks are renewing their interest in opening new branches across the country, with others like NCBA, Absa and I&M now setting up in locations that were not traditionally their areas of focus.

I&M Kenya CEO Gul Khan said the lender plans to double its physical branches in Kenya to 100 by the end of 2026 in the race to increase its share of retail banking business in the country.

“A big part of our strategy is to really scale up our retail business. Historically, I&M Bank has been a fantastic corporate and SME [small and medium-sized enterprises] bank. Part of our strategy is to build up retail banking. To do that, we are trying really hard to become globally relevant for Kenyan consumers,” said Mr Khan.

The bank sees a mix of physical branches and digital platforms helping it to grow its business in Kenya and beat the general feeling that the market has hit maturity.

“We want to get to one million customers in the next few years and there are a lot of pockets we see in Kenya with a strong retail activity, especially for MSMEs [micro, small and medium-sized enterprises] and we will be filling those pockets,” he said.

Retail banks offer financial services for the general public ranging from everyday spending on needs such as food to life events, such as buying assets.

Banks are realising that while customers run large parts of their lives in the digital world, much of their behaviour and needs are driven by offline actions.

This realisation is fueling investments in physical branches, with lenders such as KCB, Co-operative Bank and NCBA lining up additional outlets.

The race for the retail market is also being launched by StanChart Kenya, which has for the longest been focusing on affluent individuals and large corporations. The lender is now becoming aggressive in the mass retail market.

StanChart has introduced products such as SC Shilingi to encourage small investments and it is also gearing up for the launch of SC Juza, a digital loans platform for advancing micro-loans.

Kariuki Ngari, chief executive at StanChart Kenya said in an interview that technology is going to make a big difference in ensuring the bank serves the mass retail market without having to widen its branch network.

“Now we are in the final leg of the digital lending journey. This is going to make a big difference on small-ticket loans or even some of the bigger loans in the system. That is going to change the entire mass retail proposition to become another key driver of profitability,” said Mr Ngari.

StanChart is emboldened by the traction on SC Shilingi launched mid-February 2022 and signed up more than 10,000 customers who brought in Sh1.25 billion in under a year. The fund closed last year with Sh5.2 billion under management.

Absa has made it clear that its strategy is to build “a scalable consumer banking business that is digitally enabled to drive reach, targeting a significant increase in profitable customers.” Like StanChart, it wants to digitalise its retail bank “to the core,” while evolving Timiza, the micro-loans mobile loans product into a mobile financial services business.

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