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Young and poor big users of fintech

By Moses Omusolo | July 30th 2019

Innovations in banking have had the greatest impact on the young and poor Kenyans, a new study shows.

According to Infotrak, 58 per cent of young Kenyans now use less of traditional banking products and services. The same is true for poor Kenyans whose use of new channels stands at 58 per cent.

“Youth (18 – 34 year olds) and low income households are the groups who have been highly affected by the usage of mobile financial service providers. Mobile channels are therefore a window to capture the traditionally financially excluded segments,” said the "Changing Face of Banking" report.

Moreover, the survey shows the discrepancy is small when it comes to gender as 56 per cent of females and 54 per cent of males reported using less and less of traditional banking products and services.

The well-to-do Kenyans however are highly suspicious of fintech as 46 per cent of middle income and only 13 per cent of high income make use new avenues.

Adoption rate for alternatives is low among older Kenyans at 36 per cent for those aged between 35 and 49 years and 34 per cent for those aged fifty years and above. 

The study also found that such disruptions do not yet pose a threat to physical banking as 80 per cent still value the traditional human model of customer service.

According to the report, 66 per cent of Kenyans are likely to use physical branch outlets while 78 per cent are likely to use ATMs. Another 71 per cent are likely to use mobile banking.

“Four in every five of banked Kenyans are more likely to use ATMs in future as about 3 quarters of banked Kenyans are likely to do over-the-counter transactions in future,” said the report. 

This is as cash withdrawal or deposit through physical touchpoints (Branch, ATM and agents) account for the largest portion of transactions Kenyans carry out with banks.

Mobile and internet banking transactions and products come in second ahead of cards and other traditional financial products and transactions.

“Therefore, it’s not yet time to shut physical branch outlets,” said the report.

Yet insurance companies rank as the least trusted financial service providers even as many consider them less relevant.

“Commercial banks, closely followed by mobile based financial service providers, are cited as the most important (86 per cent), trusted (85 per cent) and relevant (86 per cent) financial service providers among banked Kenyans,” said the survey.

Moreover, Infotrak found that even as trust for commercial banks is high across all demographic, it is higher among Kenyans aged 50 years and above.

“Trust for insurance companies is lower than that of banks and is skewed to banked Kenyans whose level of education is university and above.”

Commercial banks are more trusted in Coast at 94 per cent and Eastern (90 per cent) and Central (90 per cent) compared to other parts of the country.

Trust for mobile based financial service providers, on the other hand, is skewed to Nairobi region at 84 per cent.   

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