NAIROBI, Kenya, Aug 31 – Technology adoption in the banking sector has changed the way of doing business for banks in the Kenyan market, as they seek to lower their cost of doing business.
The new technology has seen staff levels reduce as about 2,500 staff left the sector, attributable to technological improvements.
This is according to the Bank Supervision Annual Report 2016 by the Central Bank of Kenya.
Supervisory staff went down by 628 in the period under review, while Clerical and secretarial staff declined by 1,988.
“This is an indicator of the banks’ improved processes hence reducing the number of required Supervisory, Clerical and Secretarial staff,” the report said.
In the period under review, a number of banks that include KCB Group, Family Bank, Cooperative Bank, Barclays Bank of Kenya and Sidian Bank, announced staff layoffs.
According to the report, 15 out of 47 counties registered a decrease in the number of bank branches.
“The decrease in physical bank branches expansion is partly attributed to the adoption of alternative delivery channels such as mobile banking, internet banking, and agency banking,” the report states.
Moreover, Automated Teller Machines (ATMs) have also reduced by 2.3 per cent in 2016 as banks closed about 62 ATM machines in 2016.
The banking sector has been evolving, with mobile banking, agency banking and online banking taking the lead.
Mobile banking has taken the lead, with most loans and withdrawals now being offered over the phone.
KCB Bank and Equity Bank are on record saying that over 70 percent of their loans are now being issued via the mobile phone.
This trend is expected to continue in 2017.
Barclays Bank of Kenya closed seven of its branches and announced plans to invest in agency banking.
The banking sector registered improved performance in 2016 with profit before tax increasing by 10 per cent to Sh147.4 billion in December 2016 from Sh134 billion in December 2015.
The increase in profitability was attributed to a higher increase in income compared to the rise in expenses.
The banks’ income increased by 5.7 per cent in 2016 whereas expenses increased by 3.8 per cent over the same period.
*Additional reporting by Jemimah Mueni