KCB forfeits Sh1b in digital banking fees to accelerate mobile transactions for customers

The bank removed digital banking fees and charges to facilitate mobile transactions for customers and reduce the handling of cash as a Covid-19 countermeasure.

Speaking soon after announcing a jump in Q1 profit to Sh6.3b from Sh5.7b last year, KCB Group Chief Executive Officer Joshua Oigara said the bank hasn’t charged customers transaction fees to use mobile banking services since the first case of Covid-19 was announced in Kenya on March 13th, 2020.

“We estimate that we have given out over a billion shillings in free services…and we have seen a lot of transactions on these channels,” said Mr. Oigara.

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But despite the concession to cushion customers, KCB’s mobile loan book in Q1 2020 grew by 49.1pc to close the quarter at Sh127b.

Growth in mobile loans drove the 23.7pc year on year increase in fees and commissions on loans, according to analysts at Genghis Capital.

“The key growth driver for the bank will be its ability to leverage effectively on its digital platforms to drive both efficiency levels and Non-Interest Revenue,” noted an advisory from Genghis Capital.

Mr. Oigara said the overall quarterly performance was however below expectations because of a tougher macroeconomic operating environment.

“We expect performance in the next two quarters to be impacted as the crisis is affecting the ability of customers to service their loans and reducing the demand for credit. We have taken measures to conserve our capital, manage costs and keep an eye on liquidity,” added Mr. Oigara.

Digital transactions saw non-branch transactions rise to 97pc up from 94pc in Q1 2019 mainly driven by mobile, internet and agency banking while non-branch volumes increased from Sh340b to Sh445b as channel migration initiatives expanded over the period.