Majority of Bank Customers Shun Branches for Mobile Apps

The landscape of banking in Kenya is undergoing a significant transformation as more customers are opting to use mobile applications for their daily transactions. A recent survey conducted by the auditing firm KPMG highlights this shift, revealing a growing preference for digital banking solutions over traditional banking methods.

Survey Insights

The 2024 Kenya Banking Industry Customer Experience Survey, conducted across Nairobi, Mombasa, and Kisumu regions, indicates a clear trend towards mobile banking. According to the survey, 42% of respondents interact with their primary bank through mobile apps, a stark contrast to the 24% who still visit physical branches. Additionally, 14% of customers use banking agents, while 11% prefer Automated Teller Machines (ATMs).

“Our research indicates that a majority of the banked population are between 26-35 years of age, and the main services they access include savings accounts, mobile banking, current accounts, cash deposits/withdrawals from branch tellers, and cash deposits/withdrawals from bank agents,” stated KPMG in the report.

Drivers of Mobile Banking Adoption

Several factors contribute to the rising popularity of mobile banking in Kenya. High internet penetration and the widespread use of smartphones have made banking services more accessible to the population. The latest data from the Communications Authority of Kenya indicates that as of March 2024, there were 51.3 million mobile data subscriptions, with 72.6% on mobile broadband. During the same period, the number of smartphones connected to mobile networks rose to 34.5 million.

Transaction Preferences

Withdrawals are the leading transaction type conducted by bank customers in Kenya, accounting for 52% of transactions. This is followed by deposits at 50% and savings at 29%. The survey notes that the main transaction types include withdrawals (50%), deposits (34%), funds transfer (5%), and requests for bank statements (3%).

Customer Experience vs. Cost

One of the most significant findings from the survey is the emphasis customers place on excellent customer experience over the cost of banking services. The majority of respondents (47%) prioritize excellent customer experience, while only 6% are concerned with the cost of a banking service.

“This implies that customers’ sensitivity to charges and costs is low, and they rank customer experience over and above the cost it takes to access services via a given channel. For banks in Kenya, excellent customer experience should be a key focus of the service offering. Banks need to have a well-articulated customer experience strategy to facilitate a blueprint in offering quality customer experience to customers,” stated the survey.

Demographic Insights

The survey, which included 886 respondents from Nairobi, Coast, and Western regions, found that 25% of respondents were business customers, while 75% were retail customers. The age demographic between 26-35 years is particularly notable, indicating a young, tech-savvy population driving the shift towards mobile banking.

Implications for the Banking Sector

The findings of the KPMG survey have significant implications for the banking sector in Kenya. As more customers embrace mobile banking, banks will need to invest in enhancing their digital platforms to provide seamless, user-friendly experiences. This includes ensuring that mobile apps are secure, reliable, and capable of handling a wide range of transactions.

Enhancing Digital Infrastructure

To meet the growing demand for mobile banking, banks must prioritize upgrading their digital infrastructure. This involves not only improving the functionality of mobile apps but also ensuring robust cybersecurity measures to protect customer data. As mobile banking becomes more prevalent, the threat of cyber-attacks and fraud increases, making it imperative for banks to stay ahead of potential security breaches.

Focus on Customer Experience

With customer experience emerging as a top priority, banks must develop comprehensive strategies to enhance service delivery across all channels. This includes training staff to provide exceptional customer service, streamlining processes to reduce wait times, and leveraging technology to offer personalized banking solutions.

Leveraging Data Analytics

Banks can also leverage data analytics to gain insights into customer behavior and preferences. By analyzing transaction patterns and customer feedback, banks can tailor their services to meet the specific needs of their clientele. This data-driven approach can help banks identify opportunities for improvement and develop targeted marketing strategies to attract and retain customers.

Future Outlook

The shift towards mobile banking is expected to continue as more Kenyans gain access to smartphones and the internet. As this trend progresses, banks will need to adapt to the changing landscape by embracing digital transformation and focusing on delivering exceptional customer experiences.

The 2024 Kenya Banking Industry Customer Experience Survey by KPMG underscores the significant shift towards mobile banking among Kenyan customers. With a growing preference for digital solutions, banks must invest in enhancing their mobile platforms and prioritizing customer experience to stay competitive in the evolving banking landscape. By doing so, they can not only meet the demands of their tech-savvy customers but also drive financial inclusion and economic growth in Kenya.