Tech savvy Kenyan banks leave Nigerian banks in their trail

Tech savvy Kenyan banks leave Nigerian banks in their trail

Most of Nigeria’s banks are larger than their Kenyan counterparts, but apparently the East African companies are making more money than their West African counterparts all thanks to efficient technology use.

Ratings agency Moody’s says in a report that Kenyan banks are making more money from their customers because they have deployed more mobile channels and favoured third party agent hiring to get their services closer to the consumer, in the process cutting their operating costs massively.

“Kenyan banks’ cost-to-income ratios averaged 49 percent over the last four years, compared with 57 percent for Nigerian banks. This, together with lower provisioning requirements, supports the higher profitability of Kenyan banks,” Moody’s said.

In 2018 there were 31,889 employees in the Kenyan banking sector compared to 36,923 in 2014. Statistics from the Central Bank of Kenya also show that there were 1,505 bank branches in 2018 compared to 1,518 the previous year as banks continued to close brick and mortar facilities.

Moody’s projects that earnings for Kenyan banks are set to increase due to the recent removal of interest rate caps that had seen the lenders become reluctant to loan small businesses.

Lagos based banks that are keen to tap into the superior business model in Nairobi include Guarantee Trust Bank, United Bank of Africa, and Nigeria’s largest lender Access bank. Kenya is a leading mobile phone banking centre in the world where failure to have a mobile lending platform is synonymous with strangling your own business.

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Author: Moshek Africa

Moshek Africa is a digital media research and development web service. The website offers informative content for a large audience interested in varied information. With a lot of interest in Kenya and the East African region tech, business, travel spaces, and Africa at large. It also covers universal content of interest to the world.