How tech is transforming needs of bank customers

Technology has exerted a huge impact in the way businesses, not just banks, interact with their customers. But, just as in any other sector where companies directly interact with their customers, banks have found themselves in a unique position where they can collect data about their customers economic behaviour and lifestyle choices.

According to the latest data published by Infotrak, more than half of customers use financial technology, also known as fintech, to interact with banks. That means they are less likely to use traditional bank products and services.

“This proportion is higher among the youth (18-34 years old) and households earning a monthly gross income of Sh40,000 and below,” says the survey, pointing to the need for banks to integrate their customer-facing technologies with fintech innovations.

But even as banks race to digitise their operations, they should be mindful of the fact that 33 percent of those who were interviewed said their “usage of traditional banking products and services has not changed”. Though clearly not in the majority, they represent a significant demographic that cannot be ignored. Of the respondents, only nine percent said they use more of traditional banking services and products. Another five per cent refused to answer.

A total of 801 respondents were interviewed for the survey. Of these, 93 percent said they had personal or retail bank accounts while 12 percent said they had business accounts. Two percent had other types of accounts while one percent declined to reveal. Customers from all leading banks were interviewed.

Among all the respondents, 446 said they were already using fintech while 359 said they were not. Those who have already been converted had a higher proportion of respondents saying they would continue to use fintech even in the future.

“The market niche for fintech exists and is supported by their flexibility, availability and convenience,” says the Infotrak survey.

Mark Kaigwa, the founder of Nendo, told the survey team that a great deal has changed in the banking space in the last 10 years.

“Financial technology start-ups have gone from fledgling outfits to near billion-dollar enterprises within the past five years,” he says. “Lending apps, specifically, have plugged a hole and… created a runaway success of what it means to be a purely mobile-based digital platform.”

According to the survey, bank customers with university education and above were more likely to use fintech, followed by those with a college education, with secondary education and below being most unlikely to adopt fintech. Those with the lowest levels of education prefered to transact with banks and least likely to transact with insurance firms.

“Our forecast for the future likelihood of using mobile banking is 67 percent for apps and 71 percent for USSD (for those who do not own smart phones),” says the survey. “Online/internet banking, which is also a relatively new concept, has the lowest likelihood of future usage. However, a higher proportion of univeristy-educated banked Kenyans and youth (18-35) are more likely to use it in future.”

Among those interviewed, 68 percent were aged between 18 and 34; 28 percent were aged between 35-49 while the rest were above 50. over half (53 percent) were men, the rest were women. from the sampled group, 36 percent said they earned less than Sh20,000 a month. A similar number earned between Sh20,00 and Sh40,000 a month, while 17 percent earned between Sh40,000 and Sh80,000.

Of the respondents, a vast majority (69 percent) said they had only one bank account; 23 percent said they had two and six percent said they had three. Only two percent had four accounts.