NCBA Group bucks trend with six new branches

NCBA Group #ticker:NCBA plans to open new branches, raising its count from 78 branches to 84 by year-end, bucking a trend of banking hall closures as lenders shift to digital platforms.

The bank, which shut 14 of its branches in Kenya last year due to the disruption caused by Covid-19, said yesterday its decision is informed by the need "to get closer to" its customers.

"We are planning on doubling our network," managing director John Gachora told the Business Daily.

Lenders including StanChart #ticker:SCBK, Stanbic #ticker:SBIC, Equity #ticker:EQTY and SBM Bank Kenya have shut several branches headlining the shift to digital banking in place of the traditional brick-and-mortar.

According to Central Bank of Kenya (CBK) governor Patrick Njoroge, 96 percent of transactions happen outside the bank branches. This is up from 91 percent before the Covid-19 pandemic struck.

This as many lenders roll out digital banking platforms, which have in turn cut the need for customers to visit brick-and-mortar outlets for services such as the opening of accounts, balance inquiry and settling bills.

But Mr Gachora defended the bank's plan saying it will enable it to capture new markets and increase proximity to its customers through brick-and-mortar.

"We believe given our size, the spread of our customers and the value we bring, we have to get closer to our customers and our target," he said.

"We are also expanding our product offering to capture new markets."

The rise of digital banking has allowed lenders to reach customers directly, reducing the need for physical locations in a move that has also led to massive job losses among clerical staff.

Equity Group CEO James Mwangi told the Business Daily earlier that the bank has witnessed a surge in high-value transactions on digital channels, which has for long been a preserve of branch transactions.

“The silver lining for us was to use Covid-19 as the tailwind to push more customers to digital banking. Many may never go back to brick-and-mortar banking,” said Mr Mwangi.

“Big transactions are now moving out of banking halls to digital transactions.”

Banks have also attributed the digitisation push to the Covid-19 disruptions that hurt customer traffic in banking halls.

NCBA was the third bank by assets in 2019 after the merger of the former NIC Group and CBA Group but has since been relegated to fourth place with Sh542.59 billion assets as of June 30.

The lender said earlier the marriage had left the new outfit with branch overlaps while in some instances, the outlets faced each other across the streets prompting the earlier branch closures.

Mr Gachora said yesterday the latest branch expansion plan coincides with new hires.

"We have been hiring branch staff and have also promoted a lot of our staff," he said.

The digital shift has in turn cut the number of staff who were previously needed to offer the services at various bank branches.

NCBA last year spent Sh742 million on the Voluntary Early Retirement programme that saw the exit of 130 employees.