Afrigather Kenyan banks spend over $900 month-to-month to run a single ATM, and the invoice grows for main industrial banks with tons of of ATMs unfold throughout the nation.
For years, automated teller machines (ATMs) had been the go-to possibility for patrons attempting to keep away from lengthy queues within the banking halls. However not anymore, because of the expansion in digital banking choices like cellular apps and agent banking. It has allowed conventional banks to scale back their funding in ATMs for the fifth consecutive 12 months.
Banks closed 77 ATMs between January and December 2023, bringing the overall depend to 2,282, in line with knowledge from the Central Financial institution of Kenya (CBK). That is the bottom variety of ATMs recorded within the nation in half a decade, a notable drop from the height of two,573 ATMs recorded in 2019.
The shift is as a result of rising recognition of digital banking channels. Beginning with Fairness Financial institution, Kenya’s largest financial institution by market capitalisation, all native banks have adopted digital channels.
Digital banking has grown in Kenya between 2020 and 2024. The worth of digital funds within the nation rose from $2.63 billion in 2019 to $7.15 billion in 2023 and is projected to achieve $8.58 billion in 2024. Digital banking might additionally attain a web curiosity earnings of $255 million by the top of 2024.
Cellular banking was probably the most used channel, leaping from 52% in 2020 to just about 68% by March 2024. Web banking additionally grew, however at a slower tempo, reaching round 23% in March 2024, reflecting elevated web entry and machine possession.
ATMs are costly
Kenyan banks incur a month-to-month price of no less than KES 117,000 ($906) per ATM, and lenders like Kenya Business Financial institution, which has 380 ATMs nationwide, might spend over KES 44.4 million ($344,000) on upkeep.
“It’s pricey to run an ATM terminal, so banks have a tendency to avoid wasting this price by closing ATMs with much less exercise,” a financial institution government advised TechCabal. “These prices are within the type of topping up ATM channels with money every day and manning the power. This isn’t the case for digital transactions.”
In 2023, company banking grew in Kenya, with 16 industrial banks and 5 microfinance banks (MFBs) enlisting 87,531 and 677 financial institution brokers, respectively. Greater than 90% of the financial institution brokers had been working for Fairness Financial institution (40,211), KCB (24,055), and Cooperative Financial institution (15,519), indicating the recognition of the service, particularly in rural elements of the nation.
The demand for cashless transactions can also be evident in cellular cash, whose transactions in Kenya grew to KES 788 billion ($6.1 billion) in December 2023. With 38.7 million customers, cellular cash penetration hit 75%. The worth of cash moved by these platforms jumped from KES 7.8 trillion ($60 billion) within the 12 months to June 2023.
The COVID-19 pandemic accelerated cellular cost adoption, and lots of customers continued utilizing the channel after the CBK re-introduced transaction prices in early 2023.
