Covid-19 Driving Growth of Digital Financial Services

Equity Group Managing Director and CEO Dr James Mwangi

They say every cloud has a silver lining, and the Covid-19 pandemic seems to be inspiring the growth of digital financial services if the recently released financial results of the region’s largest commercial bank and communications companies are anything to go by.

In its third-quarter financial results released on Monday, Equity bank announced that legacy banking – physical branch networks and ATMs, now account for only 3% of the bank’s transactions. 945 million transactions were carried out on mobile devices or on 3rd party infrastructure.

Telecommunications giant Safaricom also announced a 42% growth in transactions volume to 7.3 billion as it released its financial results for the six months ending 30th September 2021. This was partly attributed to the growth in the bank to mobile transactions as Kenyans were encouraged to avoid handling cash and other physical payment methods as part of the Covid-19 containment measures.

Equity Group CEO, Dr James Mwangi says the lender is “on a journey to transform itself into a digital business. The power that a branch manager used to enjoy of deciding when a customer gets service and what service they get has been shifted to the customer. They have ultimately won the freedom of managing their own money.”

Safaricom is also attributing growth in its mobile money services to innovations in the financial sector.

“Innovations in digital financial services has been a key growth driver for M-Pesa. We continue leveraging on technological innovations to enhance access to financial services for consumers and enterprise customers,” said the telco in a statement.

This shift which is likely to be witnessed across the financial sector as more players release their financial results in the coming weeks will also see players in the industry relook at the role their branch networks will play as consumers’ service-seeking behaviour changes in favour of the digital platforms.

Equity Bank is already positioning its network of 190 branches into centres of excellence focusing on customer experiences, providing advisory and consultation services for SMEs and large customers.

This developments also mean that financial institutions need to invest in their systems strengthening processes to ensure that these critical back-end systems do not fail. Additionally, the institutions are acquiring some of the best talents from across the globe to guarantee the security of digital transactions in the wake of growing cyber attacks across the globe.