The Time is Ripe for a Digital transition

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Digital banking is a convenient and flexible way to bank. Traditional banking services constituted labor-intensive activities such as long commutes to the bank to make physical cash deposits, withdrawals or transfers. Digital banking is now the preferred rather than a mere alternative mode of transaction as banks are able to offer everything from cash withdrawals, loan applications, balance enquiries,  transfer of funds as well as utility bill payments.

Kenya has responded to the global digital shift in ways that can only be described as exemplary for other developing economies. Kenyan banking institutions are increasingly investing in technological advancements to capitalize on the untapped opportunity, improve quality service delivery whilst spurring growth.

Kenya has a digital edge over most African countries including high-speed internet connectivity and increased internet penetration. Many optimists believe that now is the time for a digital revolution. Below are some of the areas that have been spurring a new wave of digital transition in our banking sector in the country:

Mobile phone penetration and internet speed

The current mobile subscriptions stands at slightly over 41 million with mobile penetration at 90 per cent of the Kenyan adult population. The driving force behind the rapid increase in mobile phones in the country is mainly attributed to the introduction of budget and population-specific mobile phones that has greatly increased affordability.

The upsurge of mobile banking services has also perpetuated the continued mobile growth in the country. The consistent increase has pushed the country’s internet penetration to an enviable position ahead of other countries in Africa.  According to the latest report by e-commerce company Jumia, Kenya’s internet penetration stands at 83 per cent, with Nigeria coming second at 81.

The increased internet penetration has seen most banks embrace digital banking which is slowly becoming an integral channel for banks. Most youths loathe the brick and mortar banking setup and prefer using digital devices to conduct banking activities due to its convenience and ability to save on time.

Ranking 14th globally in the fastest mobile internet speed, digital banking in the country is poised to continue growing steadily with the onus being on banks to heavily invest on their digital capabilities in a bid to improving the customer relationships hence a better customers’ banking experience.

Youthful and vibrant population

Kenya has a median age of 19.7 years-the age that divides the population into two equal groups-while Africa’s media sits at slightly over 20 years. This is a great contrast to the global median age of 31 years. Among developed nations, the USA has a median age of 38 while Japan’s sits at 47 years.

Being among the countries with the youngest population on the continent, the Kenyan populace provides an admirable chance for the country to go through a radical digital transition. Youths have over the years been early adopters of new technology and are more inclined to embrace digital solutions compared to the older generation. Studies also show that young people prefer digital solutions to the traditional face-to-face channels such as physical banking. Digital banking solutions must therefore be oriented towards the financial and lifestyle habits of a largely millennial population.

Fast growing population

Kenya is experiencing is experiencing a rapid population growth. The last official census in 2009 confirmed that about 38.6 million people were living in the country. Last year’s (2018) population estimate puts the number to about 50.95 million, which ranks at 29th globally. With improved life expectancy and a drop in infant mortality, Kenya looks set to build on an ever-increasing population. According to United Nations population estimates and projections, the Kenyan population will have risen to 53.4 million by the year 2020, and is predicted to exponentially increase to 95.5 million by the year 2050.

The biggest advantage for banking institutions is that the population will always have varied tastes and preferences. Therefore, instead of spending long hours and resources developing strategies to attract existing clients from your competitors, market players will only have to streamline their core value propositions to attract prospective clients.

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