Public trust in the Kenyan banking system is still in doubt, with 51 per cent of depositors showing total distrust in their banks, Kenya Banking Association report has revealed.
According to the study conducted early this year, 11 per cent of depositors said that they totally distrust their banks while 40 per cent revealed that they somewhat distrust their banks. Another 48 per cent of them expressed trust, with the remaining one per cent saying that they were not sure.
This survey reflects views of Consumers Downtown Association, a consumer protection lobby that insist banks are robbing consumers through hidden credit charges and exorbitant transaction fees.
Speaking during a joint meeting with KBA at a Nairobi hotel, CDA chairman Tom Oketch said that Kenyans are looking for alternative ways to save and get credit due to the unfriendly nature of commercial banks.
He explained that the cost of credit has not been clear to the borrowers due to lack of full disclosure by lending institutions. ‘
‘Customers have been making credit choices based on interest rates charged only, not factoring other additional costs including legal, insurance, application government levies, stamp duty and valuation fees. Disclosure of these surcharges will go along way in building consumer confidence in banks,’’ said Oketch
While acknowledging the existing wrangles between lenders and borrowers, Ms Nuru Mugambi, director communications, KBA, said consumer awareness about the recently launched Annual Percentage Rate pricing model was underway
The tool allows borrowers to calculate the total cost of credit including surcharge fees, aiding them to make wise borrowing decisions.
‘’Our partnership with consumer bodies like CDA in sensitizing customers about revolutionary tools like APR is what will strengthen consumers and the banking industry,’’ said Mugambi
The financial inclusion trend in the country is however positive. According to the study, 42.3 per cent of Kenyans can access banking services compared to a paltry 15 per cent in 2006.
The number of deposit accounts have increased from 1 million in 2006 to 35.1 million recorded in 2015.
Even so, the traditional banking system is losing ground to the new age banking platforms like mobile banking which are cost effective and efficient.
Safaricom’s M-Pesa for instance reported to have reached 26 million users in the country, transacting Sh184 billion by May this year, up from Sh 83 million in 2006. Apart from other mobile money platforms in the country like Airtel and Telecom money, the country has witnessed the birth of lending and saving applications like Tala and Branch
All is not lost in the commercial banking sector which is embracing technology to serve clients effectively. The KBA report shows that 90 per cent of consumers are not planning to change their banks anytime soon.
Majority of them however want faster services, less transaction fees, enhanced data security and mobile money platforms.