The number of Kenyans using multiple accounts fell further to 48.2 percent last year, down from 62 percent in 2021 as customers cut back on the costs associated with more banking relationships.
A Kenya Bankers Association (KBA) customer satisfaction survey found that 48.2 percent of Kenyans had two or more accounts, a ratio that has been declining from a high of 77 percent in 2020.
“The ownership of two or more accounts stood at 48.2 percent which is a reduction from 62 percent in 2021,” the survey reads.
The trend is the result of the closure of some accounts as well as new people entering the formal financial system opening fewer accounts than seen before.
Each additional account means more costs as transaction fees, monthly and annual charges, depending on the type of account and tariffs set by the institution.
The use of several accounts is driven by the need to diversify banking risk, separate personal and business affairs and access unique services by different lenders, among other reasons. More accounts can also help one acquire more loans.
The banking industry has benefited from the use of multiple accounts, allowing several institutions to earn revenue from a single customer.
Others have separate accounts in case of bank failure and want to try out different financial institutions to find out what suits their needs.
Keeping money in one bank can be convenient and simplify one’s financial life.
However, if the account balance exceeds the deposit limit (Sh500,000 per account) that is insured by the Kenya Deposit Insurance Corporation (KDIC), some of the cash may be lost in case of bank failure.
Last year, the Central Bank of Kenya announced the reintroduction of charges on transactions between mobile money and bank accounts, making it more expensive for retail clients to use the services which rank high in terms of convenience.
An FSD Kenya research found that running a bank account in the country costs, on average, Sh4,419 per year, ranging from Sh845 to Sh17,750 annually.
The report showed that bank customers on average spend Sh3,944 on withdrawal charges, Sh4,485 on bank transfers and Sh1,007 on account maintenance fees yearly.
Kenyans suffered job losses in the wake of the pandemic and reduced income which could have inspired some customers to close some of their non-core bank accounts to cut costs.
The KBA survey showed that single bank account holders stood at 45.3 percent.
“Those holding between four and five accounts accounted for 5.8 percent, while only 0.7 percent of the respondents held more than six bank accounts,” the survey says.