First it was the mobile phones replacing the need for physical branches but now the handsets are threatening to may make Automatic Teller Machines (ATM) as obsolete as old computers.
Equity Group customers use of ATMs fell by 50 per cent over the last year at a time when the adoption of mobile phones accounted for 945 million transactions or 97 per cent of all the total volume of transactions.
Out of the 975.1 million transactions processed for the nine months of the year, only 30.1 million transactions or 3 per cent of all transactions were handled at the bank’s branches and ATM stations.
Financial disclosures show that the Group is increasingly shifting from its legacy brick and mortar model of fixed cost structure of branches and ATMs to variable cost, self-service model of client’s own electronic devices or third-party infrastructure.
However, part of the increased use of mobile phone transactions was driven by the suspension of charges for transaction between bank accounts and mobile wallets by the Central Bank of Kenya (CBK) as well as the upward adjustment of mobile wallet limits.
“Increasingly mobile internet and e-commerce are becoming the preferred channels of choice for payment processing and lifestyle fulfilment with 74 per cent of customers opting for cashless transactions,” Equity Bank Group CEO, Dr James Mwangi, said during the third quarter investor briefing.
Not long ago, millions of customers had to queue up in a banking hall to withdraw money directly from the tellers.
For many other customers, ATMs provided self-service at different locations in banks, shopping malls and petrol stations, but the innovation had a handicap in that one could only withdraw Kes40,000 at a time.
Enter the mobile phone which had two advantages, no fixed locations and an increase of transaction limit to Kes70,000.
This convenience attracted Kenyans, who are fast adopters of mobile based technology especially money transfer and payment services.
But the real game changer came during the Covid-19 pandemic when transaction limits on mobile were more than doubled to Kes150,000. The daily limit was also reviewed to Kes300,000 while the mobile money wallet was capped at Kes300,000.
The monthly total limit for mobile money transactions is eliminated and transfer of money from bank accounts to the mobile wallet was made free of charge, a move that is helping grow usage.
With these developments in place, no other transaction channel has been able to compete with mobile and Equity Bank says it is modelling the future of banking to sync with this shift.
“Covid has acted as a tail wind to the adoption of digital banking making us transform into a Big Tech in the financial services sector” said Dr Mwangi.
Equity Group merchants digital payments ‘Pay with Equity” (PWE) transactions grew by 408 per cent from 3.1 million transactions to 15.8 million transactions while the value of the transactions grew by 392 per cent from Kes17.1 billion to Kes84.1 billion.
Further, retail personal internet (Eazzy Net) transactions grew by 287 per cent from 400,000 transactions to 1.5 million transactions with value transacted growing by 404 per cent from Kes16.6 billion to Kes83.5 billion.
Corporate internet banking transactions grew by 42 per cent while the value of transaction grew by 77 per cent.
Eazzy App transactions grew by 82 per cent while the volume transacted grew 153 per cent.