NAIROBI, Kenya, Sept 23 – The Central Bank of Kenya (CBK) says adoption of technology in the banking sector will greatly reduce the cost of banking services.
Speaking during the launch of Kenya Commercial Bank’s (KCB) mobile banking service, KCB Connect on Wednesday, CBK Governor Professor Njuguna Ndungu said for long, high charges had excluded many Kenyans from accessing banking services.
“The challenge now is to the banking sector to embrace innovative delivery channels that will extend financial services to the poor at an affordable cost and through convenient channels,” he said.
Prof Ndungu added that once banking costs are reduced more people would be encouraged to bank their money rather than use unconventional methods to save money.
“I appreciate that in the last three years banks have decided keeping high barriers in terms of banking costs was not efficient and have begun lowering them so that more Kenyans can access financial services,” Prof Ndungu said.
The Governor said more innovative banking services were necessary to revive confidence in the financial sector.
“With 33 percent of Kenyans still unnerved by the formal financial sector, technology will be key in tapping into this segment,” he stressed.
“Without confidence in the market, this proportion can only increase,” he added.
Following the forum to launch the Alliance for Financial Inclusion (AFI), Prof Ndungu said CBK was conducting studies to see how best to integrate branchless banking in Kenya.
“Brazil and Mexico will form our base for research since it has been a huge success there.”
KCB Group Chairman Peter Muthoka said investment in modernisation and the upgrade of its IT systems had resulted in a surge of its branch network, which he said would continue to grow throughout the East African region with the launch of KCB Connect.
“Our major preoccupation is to consolidate our business to ensure provision of improved customer service, achieve efficiency and productivity,” he said in reference to the upgrading of the bank’s IT system, T24.
KCB also plans to expand its market share in East Africa, which Mr Muthoka said would result in “greater returns for shareholders.”
Deputy Chief Executive for Group Business Peter Munyiri was confident that KCB Connect would be a success given that one could also open an account on their phone.
“The new KCB Connect is a telephone bank that will change the lifestyle of over 17 million mobile subscribers countrywide.”
KCB account holders and credit card holders will be able to transfer funds from one KCB account to another, from KCB to M-Pesa.
KCB Connect boasts features such as enquires, banking instructions, fund transfers, utility bill payments as well as check foreign exchange enquiries.
The mobile banking services are available all day at a cost of Sh30.