Value of Equity Bank’s digital deals overtakes branch banking

Dr. James Mwangi, Group Managing Director and CEO of Equity Group Holdings Plc and Executive Chairman Equity Group Foundation

The value of transactions on Equity Bank’s digital platform in the nine months to September surpassed those conducted at the physical branches for the first time ever, driven by deepened customer shift to cashless transactions in the wake of Covid-19.

Data by the lender shows that the value of transactions on its digital platforms such as Equitel and EazzyBiz grew by 25 percent or Sh396 billion to Sh1.988 trillion to dwarf in-branch dealings recorded between March and September.

In contrast, the value of transactions on legacy channels, which include branch and automated teller machines (ATMs), dipped by 14 percent or Sh279 billion to Sh1.73 trillion. The rise relates to the nine months ended last September, with the sharpest momentum coming after mid-March when Kenya reported the first case of the infectious virus.

Equity Group CEO James Mwangi told the Business Daily that the bank has witnessed a surge in high value transactions on digital channels, a phenomenon that has for long been a preserve of branch transactions.

“The silver lining for us was to use Covid-19 as the tailwind to push more customers to digital banking. Many may never go back to ‘brick and mortar’ banking,” said Mr Mwangi.

“Big transactions are now moving out of banking halls to digital transactions. We gave businesses corporate cash and liquidity management solutions and it is working.”

He explained that the EazzyBiz channel that mostly targets businesses now has about 20,000 customers with daily transactions averaging Sh3 billion.

Equity disclosures also show that 98 percent of transactions now happen outside the branch. The growing profile for digital channels is a sharp contrast from what was seen at the close of September 2015 when branches and ATMs transacted Sh1.59 trillion—five times what digital channels moved.

The number of digital transactions also rose by 17.5 percent to 611.9 million while those on legacy channels dipped by 25 percent to 29.5 million. Many customers were reducing branch traffic to comply with Covid-19 control measures such as social distancing so as to lower risk of contracting the virus.

The shifting trends in customers, Mr Mwangi says, will give Equity more time to serve customers requiring specialised services. Branches are increasingly left with handling high value transactions for SMEs, corporates and offering, wealth management advisory services.

Equity Group posted a 14.5 percent decline in net earnings to Sh14.8 billion in the review period on the back of increased provisions for coronavirus-related defaults.