Multi-banking in Kenya surges to 53%, competition intensifys

• In Kenya, the level of bank clients running two bank accounts stood at 53% in 2023 compared to 48.2% in the 2022 survey.
• Industry survey ranks Cooperative Bank as the best overall lender in customer experience in the country followed by regional giant NCBA.
• The results show that the respondents had an overwhelmingly positive view of their banks.

The competition within Kenya’s banking sector is driving an increasing number of customers to diversify their relationships, opting to hold accounts with multiple institutions, a practice commonly referred to as multi-banking, in order to tap into a range of benefits.

In a 2023 survey, the Kenya Bankers Association (KBA) says 53 per cent of bank customers maintain more than one bank, in a trend that highlights a growing desire for customized convenience in services and products among bank customers.

Growth of multi-banking in Kenya

According to the Banking Industry Customer Satisfaction Survey (2023) by KBA, the multi banking increased from 48.2 per cent reported in the 2022 survey.

The study further reveals a notable shift towards multi-banking, with approximately 62.6 per cent of customers opting for multiple bank relationships, compared to 37.4 per cent who maintain a single-bank relationship.

Interestingly, there was a notable rise in the proportion of customers holding four to five bank accounts, increasing from 5.8 per cent in 2022 to 8.2 per cent in 2023.

Similarly, respondents holding more than six accounts also saw a slight increase from 0.7 per cent to 1.2 per cent over the same period. KBA chief executive officer Dr. Habil Olaka said the growing trend in multi-banking in Kenya underscored increasing competition among players in the sector in product offerings as well as in customer experience.

“Considering the elevated level of flexibility at the banking public’s disposal, banks that prioritize the needs of customers will continue to have a significant competitive edge over the rest,’’ said Dr. Olaka.

Read also: Chatbots and the Banking Industry: Improving Customer Experience

Growth of digital channels persists 

The preference for digital and mobile channels continued to grow, witnessing a surge in popularity, rising to 69.9 per cent from 67.8 per cent in 2022, indicating a growing reliance on digital solutions over traditional branch visits.

Further, the survey findings place the access rate to banking services by Persons with Disabilities (PWDs) at 88 per cent. However, 6.5 per cent of PWDs still require a third party to access services, denying the banking population an opportunity to manage their finances independently and equally participate in the economy.

Olaka noted that the efforts are underway to address the challenge under the industry Persons with Disability Accessibility project.

The survey respondents ranked Cooperative Bank as the best overall bank in customer experience, followed by NCBA Bank and Family Bank respectively. In the Tier I category, Cooperative Bank maintained the top position, followed by NCBA Bank and KCB Bank in position three.

Meanwhile, Family Bank emerged best in the Tier II category with National Bank and Prime Bank taking the second and third positions respectively.

ABC Bank topped in the Tier III category while Sidian and HFC Bank took the second and third positions respectively. The survey was conducted by interviewing over 30,000 customers of Kenyan banks from across the country.

“Co-op Bank will continue to invest substantial resources in building the teams, the tools and the technologies to deliver a fulfilling customer experience across all our service channels,” said Co-op Bank Group CEO Gideon Muriuki while commenting on the award.

The results show that the respondents had an overwhelmingly positive view of their banks’ customer experience. Ninety-six (96.9) per cent of the respondents rated their experience with their banks above three.

For instance, 49.7 per cent of the respondents rated their experience with their main banks at five (5), the highest rating. In addition, 37.2 per cent rated it at four (4) and 10 percent rated their customer experience at three (3).

Read also: Loan defaults hit Kenya’s banking sector amid economic struggles

Industry performance: deposit accounts drop 

Kenyan small savers with bank balances of less than Ksh100,000 ($666.66) closed 5.66 million accounts in the past two years while others have reduced their account balances to a bare minimum in the backdrop of hard economic times and proliferation of alternative savings channels such as mobile wallets and ‘chamas’.

Central Bank of Kenya (CBK) data contained in Financial Sector Stability Report (2023), shows that the number of deposit accounts in the sector declined by 7.78 per cent (5.66 million) to 67 million accounts in 2022 from 72.66 million accounts in 2020, disrupting a decade-long growth trend that started in 2010.