Technology developments spruce competition in banks
By Jackson Okoth
Competition between banks has shifted to technology, with players grabbing the slightest development to lead the show.
Apart from smart cards, automated teller machines and Internet banking, a growing number of banks have taken advantage of the mobile phone platform to provide technology-driven products to their customers.
"Banks are investing heavily in technology to enhance efficiency and improve service delivery," said Mr James Macharia, NIC Group Managing Director. He spoke yesterday during the launch of a new NIC mobile banking service.
This product enables the bank’s current account holders to debit their accounts, then upload directly to Safaricom’s M-pesa money transfer option on their mobile phones.
Mobile phone subscribers
Available figures from Communication Commission of Kenya indicate that the number of mobile phone subscribers has increased from 15,000 in 1999 to 17.6 million.
Initially used for voice, an increase in the number of mobile phone uses has attracted many, banks included. Apart from enhancing outreach to its customers, banks are also investing heavily in technology to reduce cost of delivery.
"Lending rates have been slow to fall because cost of delivering banking services remains high. But this could change in the future as we invest more in technology," he said. It costs an estimated Sh 50 million to set up one physical branch, a fact that has discouraged commercial banks from setting up in remote locations. Increased investments by commercial banks in technology and new delivery channels is happening when a large chunk of the population still do not run an account.
A recent financial access survey indicates that an estimated 33 per cent of the population has no access to any form of financial services.
Banks are therefore placing huge bets on technology to provide affordable financial services.
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