Majority of bank customers still prefer to be served at physical branches despite the increasing investment in alternative channels such as digital wallets, a new study has shown, cautioning lenders against rushed move to cut back on brick and mortar outlets.
Findings by Infortrak Research and Consulting contained in the Changing Face of Banking report’ says physical branches are still preferred by 41 percent of customers, leaving alterative channels to play catch up.
Some 23 percent of customers cited internet banking as their top preferred mode of banking while another 21 percent and 12 percent prefer short code mobile banking and agency banking respectively.
The study says customers are real people with daily life struggles and will still go looking for human-centric service beyond just their banking needs.
“By visiting physical branch outlets, customers get more than just service experiences but also status and identity experience,” the study says.
Preference for accessing bank accounts through physical branch outlets is more popular with females, customers above 50 years and those from high income households. Mobile banking applications are skewed to youth.
The study acknowledges that there is a growing need for banks to blend physical braches with alternative service channels and cautions that lenders who will do away with physical branches risk missing out on growth.
While most bank customers prefer to access their bank accounts at physical branches, there is a notable preference for mobile banking and internet banking via mobile phone applications, the study found.
However, Infortrak says physical outlets will still play a key role in onboarding of new customers since many customers are likely to continue using branches and consider large network as a key factor in choosing who to bank with.
“The act of chasing customers out of banking hall might not always go down too well with some customers making them to churn or join the detractors. Decisions that may affect branch operations should take cognisant of this fact as well as the cultural situation,” advises the research firm.
The study found that in choosing which bank to deal with, 52 percent of customers consider price while branch network comes second with 39 percent citing it ahead of customer service, security of funds or ATM network. This shows that branch network still holds a key place in the success of banks’ businesses.
The study was conducted between 12, May 2019 and 7, June 2019, with a sample size of 801 spread out in Nairobi, Nyanza, Coast, Rift Valley, Central, Eastern and Western regions.
Customers in Eastern and Coast regions were found to have a higher preference for physical branch outlets while those in Nairobi, Rift Valley and Nyanza regions recorded a higher liking for mobile-based banking apps.
Distrust for alternative channels is a major reason for locals to prefer physical branch outlets to other channels, according to Richard Mwarema, a Jamii Bora Bank branch manager in Mombasa.
“This stems from the rampant cases of cybercrime and identity theft. Such incidents spread quickly among the locals thus inculcating fear of using the modern channels,” he is cited in the research.
Despite the current dominance by branches, Infortrak says more than half of banked Kenyans with access to fintech use less of traditional banking products and services, as a result of usage of fintech.
“The future of fintech is bright as four in every five of those currently using it likely to continue using it while three quarters of those not currently using it are likely to start using it in future,” it says.
A September 2018 Customer Service survey by Kenya Bankers Association (KBA) said that banking customers in Kenya have not yet warmed up to the idea of robots and artificial intelligence and would rather have humans handle their customer service needs.
Despite the prevailing wave of automation, 54 per cent of customers cited human-centric service as their preferred mode of service.
Based on feedback from 6,121 respondents, the research attributed the outcome to Kenyans being accustomed to personal interaction when addressing sensitive matters such as their financials.
“The preference of human interaction could be attributed to the fact that the banking public is accustomed to the traditional human model, which is based on building relationships with customers,” KBA said.