Market News

Banks digital deals hit 85 percent on virus disruption


The Central bank of Kenya, Nairobi. FILE PHOTO | NMG

The number of bank transactions carried on mobile phones and digital platforms rose to 84.8 percent of total dealings in the first eight months of this year compared to 67 percent in a similar window of 2020, indicating customer shift in wake of disruptions caused by Covid-19.

Data by the Central Bank of Kenya (CBK) showed that digital transactions accounted for about 55.7 percent of the overall dealings in the pre-pandemic window of January-August 2019—confirming the swing by customers afraid of catching the coronavirus through physical contact.

The transaction includes deposits and withdrawals through mobile money platforms such as M-Pesa and Airtel Money, the use of digital platforms to transfer funds to other accounts, payment of bills like rent, and checking account balances.

The shift to digital transactions was boosted by relief measures on mobile phone payments introduced by the CBK last year to help to curb the spread of the coronavirus disease.

The waivers, that have since been lifted, included the removal of charges on small transactions and doubling of the daily transaction limits to Sh300,000

“Before the pandemic, on average, close to 90 percent of bank transactions were conducted outside branches. During the pandemic, this has accelerated to over 94 percent of transactions,’’ CBK said in the Bank Supervision Report 2020 report.

“Most notably, over 67 percent of transactions are conducted on mobile phones up from 55 percent before the pandemic.”

Some of the lenders have fully embraced the digital platforms, recording over 90 percent in digital transactions, reducing deals carried through physical branches.

Lenders such as Equity reported 85 percent of the transactions being on self-service mobile and internet banking in the year ended 2020, while 12 percent happened on agency and merchant banking.

Only three percent happened on brick and mortar branches and ATMs.

The value of the digital transactions increased 111.3 percent to Sh2.5 trillion up from Sh1.16 trillion in a similar period the previous year.