Survey: Poor service, high fees drive customers to change banks

Inside view of a banking hall. [Getty Images]

Poor customer service, high fees, and inconvenient digital banking platforms are the top reasons Kenyans are switching banks, according to the 2024 Banking Customer Satisfaction Survey released by the Kenya Bankers Association (KBA) on Wednesday.

The report highlights growing frustration among customers despite the sector's strides in digital transformation.

The survey found that nearly half of customers left their banks due to poor service, while 46 per cent cited high fees as a primary reason for switching.

Other concerns included inconvenient digital platforms (32.8 per cent) long wait times (30.1 per cent) and security issues (29 per cent).

Mobile and internet banking remain the most preferred channels, each scoring 6/6 in customer satisfaction, with over half of customers favouring self-service digital platforms for their convenience and all-round availability.

However, ATM usage and call centre interactions have declined, signalling a shift toward digital-first banking.

Despite this shift, accessibility remains a challenge. The report revealed that 10.63 per cent of customers require special accommodations, such as braille or screen readers, yet many digital banking services lack these features.

Additionally, financial exclusion persists in rural areas, where banking services are concentrated in urban centres such as Nairobi, leaving underserved communities with limited options.

KBA chief executive Raimond Molenje acknowledged the sector's progress but warned that inconsistencies in service delivery and digital inefficiencies could undermine trust.

"Kenya's banking sector is a pillar of innovation, but we must address operational gaps to sustain trust," he said.

"Strengthening digital infrastructure and inclusivity-like expanding our Persons with Disability Accessibility Project-will ensure services are seamless, secure, and accessible to all."

During the event, KCB Bank scooped two awards after it was named the best overall bank and best bank in customer experience. It was followed by NCBA Bank and Equity Bank.

Family Bank and ABC Bank topped the Tier 2 and Tier 3 categories, respectively, while Absa was recognised as the most improved bank in customer experience.

Commenting on the recognition, KCB director of customer excellence Micheu Njiru said the awards reinforce the bank's commitment to building a brand that is not focused on profits alone but on making a "delightful experience" for its customers.

"We are honoured to be the recipients of these two distinguished awards as they serve as a testament to the continuous efforts we put in serving our customers," he said.

ABC Bank Group managing director Shamaz Savani said they aim "to build lasting relationships and empower our customers to achieve financial success.''

The survey, which achieved 37,000 responses, the highest since the inaugural survey in 2018, was conducted from October 1 to November 29, 2024.

Speaking at the report's launch, Competition Authority of Kenya director general David Kemei emphasised the need for greater transparency and consumer protection.

"Transparency in fees, robust complaint redress mechanisms, and financial literacy are non-negotiable.

"With only 18.3 per cent of Kenyans financially healthy, banks must develop tools to track financial wellness and educate customers on budgeting and responsible borrowing," he said.

According to the report, customer loyalty in the banking sector has improved, with the industry's Net Promoter Score (NPS) rising from 37.7 per cent in 2023 to 44 per cent in 2024.

However, retention remains a concern, as only 36.7 per cent of customers are loyal to a single bank, while nearly half hold accounts in two or more banks, indicating they are still seeking better service options.

The report also highlighted improvements in complaint resolution, with 75.44 per cent of complaints resolved within two days, up from 66.4 per cent in 2023.

However, 16.25 per cent of customers reported inconsistent resolutions, pointing to a need for stronger service-level agreements and greater accountability in customer support.

Kenya National Chamber of Commerce and Industry CEO Ahmed Farah echoed concerns about financial exclusion, noting that micro, small, and medium enterprises, which contribute 40 per cent to Kenya's GDP, still face barriers to affordable financial services.

"Banks must expand beyond cities through partnerships to unlock digital inclusion and empower grassroots entrepreneurship," he said.