United Bank for Africa will move entirely from the brick and motor model of banking to increased agency banking networks and digitization.
The lender which has only three branches in the country, is among many banks that have resolved to tap into agency banking to rope in customers outside main urban areas and increase its market share in the region.
“We will expand across the country but using technology, the brick and mortar way of doing business is fast becoming obsolete so we will be able to expand through partnerships and technology,” UBA managing director Isaac Mwige said yesterday.
This is in the wake of a growing digital banking platform in the country which is pushing banks from brick and mortar, and the recent capping of interest rates which has slowed down lending by banks.
In light of the interest rate cap, a number of lenders have resorted to closure of bank branches and staff layoffs across the country in a move geared towards cutting operational costs.
Some of the recent closures include Barclay’s Bank which in the beginning of the month announced closure of seven branches across the country, effective October. Managing director Jeremy Awori said the move was aimed at aligning the lender’s business to the current environment.
In January, Bank of Africa Kenya announced closure of 12 branches almost a third of all branches in Kenya. In October 2016, Ecobank also announced it would be closing nine of its 29 branches in the country.
Both cited the move as a strategy geared towards reducing costs as they invest and offer more digital services to customers.
Central Bank of Kenya governor Patrick Njoroge said that the regulator is currently working with the country’s commercial banks to help them implement the new banking models.
Njoroge said concerns about the recent closures of at least 10 bank branches by Barclays Kenya and other lenders was “overblown,” saying technological innovations such as mobile phone banking were reducing the need for physical branches.
“We cannot just be stuck on brick and mortar,” Njoroge said. The bank also announced the rollout of two Mastercard electronic payment solutions that will enhance the delivery cashless solutions in the country.
“Kenya is ahead of the rest of Africa in terms of mobile banking technology and that’s really the way to go but there is space for international branded cards especially for people travelling outside the country,” Mwige said.