Online banking still a reserve for the rich - survey

An average of 90 per cent of respondents across all income bands transfer money via their mobile operator applications, while high income earners lead in online banking use

by elizabeth kivuva

Business16 September 2019 - 15:16

In Summary

•Deloitte’s Global Mobile Consumer Survey on the Kenyan market has shown the use of online banking applications for transfer of money still remains for consumers in the high-income bracket, with a high preference for use of mobile transfer services.

•People in higher income brackets use their phones to obtain more information on products and services before purchase, and across all income brackets, users regularly keep track of their online fund balances.

A technician at the Intercontinental Hotel on May 30,2014, before the launch of Mobikash, an integrated mobile banking and money transfer system /HEZRON NJOROGE

Low-income earners prefer use of mobile money applications over online banking, a new consumer behaviour survey has shown.

Deloitte’s Global Mobile Consumer Survey on the Kenyan market show only 30 per cent of people with income below Sh20,000 use online banking app, while 47 per cent in the Sh20,001 to Sh50,000 income bracket use the apps.

A larger proportion of 60 per cent with income above Sh50,000 use the digital apps offered by banks.

The survey shows that an average of 90 per cent of consumers across all income bands transfer money via their mobile operator applications provided by their network providers such as M-Pesa, Airtel Money and T-Kash.

“Societies are becoming more and more cashless while money is becoming bits and bytes floating around in cyberspace. Differences are much more apparent in other modes of money transfer such as online banking where the higher income brackets lead in use,” states the research.

The report also shows that about 25 per cent, 37 per cent and 38 per cent of the consumers use the online money transfer provider, for instance, PayPal, Western Union and WorldRemit in the respective income bands.

Financial institution apps such as Visa and Mastercard remain low at 11 per cent, 24 per cent and 28 per cent respectively.

In the current regime of compressed interest margins due to rate cap, focus on Non-Funded Income (NFI) by banks has been high as they aim to grow transactional income via alternative channels such as agency banking, internet and mobile technologies.

In the first six months of 2019, Equity Group announced a 135 per cent growth in NFI achieved by through mobile banking commissions to Sh949 million.

This means a priority in developing convenient methods for all income bands, would mean higher earnings to the banks through fees and commissions.

“Though mobile money transfer through network operators has been successful attributed to its low barrier to adoption, interoperability and convenience, there is an opportunity for industry players to collaborate, integrate payments and create an all-in-one intelligent market solution to maintain user and merchant loyalty,” the report showed.

The Deloitte report also shows that mobile payment is on the rise due to high investments by network operators and the multiple banking apps that allow people to purchase, transfer money and pay for the various services in their day to day lives.

“Businesses in Kenya have invested in options for customers to pay through mobile payment options such as till numbers and network operator services,” it added.

According to the survey, FinTech companies still continue to expand beyond payments into core banking product areas such as credit.

"Banks must take bold steps to compete with these FinTech companies that are already succeeding in delivering exceptional customer experience and meeting customer expectations," the survey added.