Economy

Banks slash ATMs to seven-year low

atm

A bank customer uses an automated teller machine. ATMs were introduced in Kenya during the 1990s to decongest the banking halls. FILE PHOTO | NMG

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Summary

  • CBK data shows the banking sector has closed 54 ATMs in the last 12 months.
  • The shift has also been quickened by the onset of Covid-19 pandemic in Kenya.

Banks have cut automated teller machine (ATM) numbers in Kenya to a seven-year low as customers increasingly turn to agency, internet and mobile banking.

Central Bank of Kenya (CBK) data shows the banking sector has closed 54 ATMs in the last 12 months, leaving it with 2,409 units at the end of October. Some 26 were closed in the last six months.

This is the lowest ATM count since September 2013, reflecting the growing popularity of agents, internet and mobile banking among customers as they search for convenience.

The shift has also been quickened by the onset of Covid-19 pandemic in Kenya in mid-March, which has seen customers opt for cashless transactions to reduce risks of contracting the infectious virus.

Total registered mobile money accounts had, for instance, stagnated below 60 million but started rising in March from 58.71 million to hit 65.25 million in October.

Cash transacted through mobile phones has been rising since April, hitting an all-time monthly high of Sh528.9 billion in October on continued waiver of fees for sending up to Sh1,000 and free bank-to-mobile wallet transfers to encourage digital transactions.

Disclosures of top two banks in the country — KCB #ticker:KCB and Equity #ticker:EQTY — show that ATM transactions are declining, reducing contribution to overall revenue.

The number of transactions via KCB ATMs dropped by 16.3 per cent to 8.7 million in the nine months to September 2020 compared to the 10.4 million in the previous similar period.

The bank further said ATMs closed September accounting for four per cent of transactions as opposed to five per cent in the previous similar period.

Revenue from ATMs dipped from Sh359 million to Sh274 million during this period.

Equity data showed ATM transactions fell 23 per cent to 15.8 million in nine months to September as the value of transactions also dipped by 11 per cent to Sh191.9 billion.

The lender’s value of transactions on digital platforms such as Equitel and EazzyBiz grew by 25 percent to Sh1.988 trillion, marking the first time for digital platforms to transacted more money than branch and ATM combined.

The banking sector has also been shifting from branches and ATMs in a push to adopt cost-effective delivery channels in offering financial services efficiently.

The sector had 2,718 ATMs at the end of 2015, meaning that over 300 units have been shut down in under five years.

The continued drop points to the waning popularity of the once-revolutionary technology that was introduced in Kenya during the 1990s to decongest the banking halls.

Kenya had more than 16 million active mobile phone deposit accounts valued at over Sh105 billion at the end of 2018.

ATMs offered customers the first escape route from long banking queues, forcing banks to install more machines.