Kenya: Banks in Kenya Realigning for the 3rd Evolution to Take On Africa

Jan 11, 2019 | The Exchange; All Africa

Kenyan banks are re-positioning themselves to take on big West African Banks as equity shifts from local shareholders to big equity funds across the globe.

For decades, Kenyan banking industry was controlled by multinationals mainly Barclays, ABN AMRO Bank and Standard Chartered Bank with strict bank environment that slowed down economic growth. Though there existed homegrown government affiliated banks like Cooperative Bank, Kenya Commercial Bank and National Bank, the industry was mainly a foreign controlled sector. Then in the early 2000s, Equity Bank took the biggest challenge to the main banks revolutionizing how Kenyans accessed credit and taking banking sector to the common borrowers in what was seen as the second evolution of banking in Kenya.

2nd bank evolution in Kenya

One could get a loan based on the number of cows he has and the amount one could borrow went lower allowing small scale business people to access and service their loans. However, the biggest gain was the local shareholders who managed to edge the 'big boys'. Equity Bank and Family Bank were owned and run by shareholders mainly from the tea and coffee growing areas of Kenya unlike the international banks whose local shareholding was dwindling.

As of 31 December 2017, Equity Group Holding Limited, the company that owns Equity Bank Kenya had assets exceeding KSh 524.5 billion. 2018 saw even greater growth with a customer base in excess of 9.2 million in the six East African countries that it serves, making it one of the largest commercial banks on the African continent, by customer numbers.

Family Bank has also grown rapidly edging out the international players. The introduction of agency banking saw the 2nd evolution kick off to a massive recruitment and convenience to customers. This phase of banking in Kenya has seen dominance by the two banks as well as government backed banks like Cooperative Bank and Kenya Commercial Bank making it to the top 5 banks in Kenya as well as venturing into the region. The period has also seen banks leverage on technology to reach more people and offer more services.

Evolution of Kenyan banks to take on Africa

Now, banks are jostling for a new evolution, probably the third. Aware that the African economy is appealing to African grown, and specifically Nigerian Banks, Kenyan Banks have started consolidating themselves to form formidable outfits to compete with these big banks of Africa.

Consolidation will place the new institution at a more competitive position to compete with major continental lenders such as those in the Western Africa market. They include Nigeria's biggest lender by market value- Guaranty Trust Bank and United Bank for Africa Plc which is among the largest lenders by revenue. They two have made significant advances in the East African market. Read more from All Africa.

 

Source: All Africa