NAIROBI, Kenya, Apr 5 – Kenyan banks have knocked off foreign dominance in the market posing a risk for the latter to exit the market if they fail to change their strategy.
This is according to a new banking report by Cytonn Investments which says foreign banks are struggling to adapt to African dynamics hence losing market to the local banks who understand the local market.
“Ten years ago, the only banks we knew were Barclays, Standard Chartered… some of these banks you could hardly even open an account with them, now, they are playing catch-up to local banks who have grown bigger than them,” said Cytonn Investment Head of Private Equity Real Estate Shiv Arora.
Arora says Kenyan banks have learnt the art of responding to the needs of the local market for convenience and efficiency through alternative banking channels such as mobile, internet and agency banking which foreign banks are yet to tap into.
“Local banks have embraced low cost operating models such as agency banking, integration with mobile application platforms and Internet banking that have lead to increased uptake of banking services particularly in the mass market. The use of alternative channels will reduce operating expenses and improve efficiency and will be a key driver for diversification,” Arora said on Tuesday while releasing the report.
He said for foreign banks to remain competitive in the market, they have to play on the same rules as local banks.
“With the impending exit of Barclays Plc from Africa, it has brought to the forefront displacement of foreign banks such as Standard Chartered, Barclays and Citibank from their perch as the key providers of banking solutions, evidenced by the receptiveness of local banks to the rapidly evolving banking landscape in terms of mobile money, agency banking and informal sector banking,” he said.
READ: Mobile, agencies driving bulk of transactions and loans for Kenyan banks
Barclays Bank of Kenya celebrated its 100 years of being existence in the Kenyan market in 2016 with the CEO Jeremy Awori reaffirming the bank’s commitment to continue its diversification agenda by launching even more new revenue generating streams including starting a stock brokerage business.
The bank further plans to enhance its accessibility by implementing a robust Agency banking strategy with Postal Corporation of Kenya and other partners and to continue its systems upgrade by modernising its entire ATM fleet by June this year.
The bank has earmarked SMEs, women, youth and innovation as key growth pillars for the bank and will therefore be making commensurate investments in these four areas.
The bank’s customer deposits were Sh165 billion while assets stood at Sh241 billion.
Barclays Bank of Kenya posted profit after tax of Sh8.4 billion for the year ended 31 December 2015.
Standard Chartered Bank has been in business for the last 104 years with total branches of 39 spread across the country with no agency banking in place.