The share of bank customers operating multiple bank accounts dropped last year in what has been attributed to clients seeking to cut costs.
A survey by Kenya Bankers Association (KBA) found that 62 percent of customers had more than one bank account last year, down from 77 percent in 2020.
“In 2021, at least six out of every 10 Kenyans (62 percent) had two to three bank accounts, lower than the nearly eight out of 10 (77 percent) observed in 2020,” KBA said in the survey.
“This is perhaps reflective of the declined economic activity and thus incomes as a result of the effects of the [Covid-19] pandemic that triggered consolidations of funds by bank clients to reduce running costs associated with maintaining bank accounts.”
Each bank account incurs operating costs such as transaction fees, monthly and annual charges depending on the type of account and tariffs set by the institutions.
A 2019 study by advocacy firm FSD Kenya found that the cost of running a bank account in Kenya ranges from Sh845 to Sh17,750 per annum.
The pandemic hurt the incomes of many households and businesses in the wake of job losses, pay cuts, retrenchment and revenue fall as restrictions to curb the spread of the respiratory illness impacted many sectors of the economy.
This could have inspired a section of customers to shut some of their non-core bank accounts to cut costs.
The use of several accounts is driven by the need to diversify bank risk, separate personal and business affairs and access unique services offered by different lenders, among other reasons.
Only 25.2 percent of the respondents had just one account, minimising their banking costs.
The FSD study found that the cost of running an account includes making withdrawals, deposits, transfers and paying for account maintenance such as ledger fees and balance enquiries. Accounts that charge a monthly ledger fee have higher annual costs.
“However, the line between pay-as-you-go accounts and flat-fee accounts is blurred as some pay-as-you-go accounts charge a monthly ledger fee,” FSD said.
“Likewise, some flat fee accounts also charge per transaction fees such as withdrawal and transfer fees.”
Bank customers on average spend Sh3,944 on withdrawal charges, Sh4,485 on bank transfers and Sh1,007 on account maintenance fees annually.
The banking industry has benefitted from the use of multiple accounts, allowing several institutions to earn revenue from the same customer.