Convenience will keep consumers in Kenya with traditional banks but with the digital currency, it's about to change
Kenya’s banking sector stays resilient amidst the pandemic
The effects of Covid19 are still with us with its newest variant Omicron, posing as a threat to various sectors across the country. According to the Kenya Bankers Association’s (KBA) - State of the Banking Industry (SBI) Report, 2020 revealed that the banking industry withstood market shocks that were induced by Covid19 even as the Kenyan economy grappled with an environment characterized by constrained supply and demand.
Kenyan banks were efficiently capitalized to weather shocks arising from the prevailing economic slowdown without triggering instability in the financial system. Consequently, Kasi’s Retail Demand Index of Financial Products computed from the Covid19 Impact tracker highlights the stability of consumer demand for financial products. The index captures the overall demand level for products during a specific period of time. From August to December 2020, it ranged between 60 to 75, which was quite high given the uncertain economic times.
Our Kasi Insight tracker Banking in Kenya – Customer Feedback conducted in (June, July, and September) 2018 and October 2019 polled 1,860 Kenyans. It gives an understanding of how consumers view the services offered by banks across the country.
Convenience and excellent customer service likely to retain bank customers
When asked about how satisfied they were with their banks, slightly more than half of the respondents (56%) were satisfied with the services offered by the banks. Only 2 in 5 respondents are dissatisfied with the services offered by their banks. On further questioning, they were asked why they would stay in their current bank instead of moving to another. The majority of them (42%) stay due to convenience, 36% due to excellent customer service and 22% believe that their banks are concerned with their financial wellbeing.
When it comes to the respondents’ gender, females prefer retaining their banks due to the convenience while males value customer service over the listed factors. Consequently, there was a disparity in age-group choices, while Millennials (25-34 years) preferred retaining banks due to customer service, Baby Boomers (45+ years) valued banks that are interested in their financial wellbeing and Gen Z (18-24 years) valued banks that were convenient; cheap and easily accessible.
Interestingly, our research found that consumer confidence drives expectations when it comes to retention. In fact, consumers who are optimistic about the economic prospects are looking for excellent customer service from their banks while consumers who are pessimistic are looking for financial wellbeing. This is an important finding for banks as it can inform their marketing effort during good and bad economic times.
Adopting Central Bank Digital Currency unwelcome news for banks
Just like its counterpart Nigeria, Kenya is looking into adopting the Central Bank Digital Currency (CBDC). Though it faces a number of challenges like cyberattacks and M-PESA dominance in the money market, the Central Bank of Kenya is hopeful that the digital currency will be good for Kenyans especially when money transfers abroad are concerned.
Adopting this technology will be unwelcome news for banks as it tends to reduce their role as intermediaries, making credit creation hard. Consequently, digital currency aims at providing convenience which is the main reason banks are currently able to keep customers. This data is quite timely as banks are informed of what to expect as CBK adopts CBDC.
Our data intelligence platform can help you track these trends in consumer behaviors in Africa over time. This provides you with valuable insights that can help you or your business make fast data-driven decisions.
Contact our team today to explore how our consumer intelligence can empower your decision-making process. Win with confidence with Kasi insights https://www.kasiinsight.com/thehub
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