Despite having opened more branches, Kenyan banks have continued to reduce the number of ATMs. The reduction currently reflects a move toward digital banking solutions for customer cash needs. According to the latest annual report from the Central Bank of Kenya, the banks closed 19 ATMs last year to reach 2,282 from 2,301 in 2022. At the same time, the number of branches went up by 36 to 1,511 from 1,475.
Historically, there have been several ATMs within every bank branch. However, the banks have been reducing and scrapping them in some locations. The CBK argues this has been due to increased usage of other banking channels, mainly through agents, mobile and digital banking.
“The number of ATMs decreased … following the adoption of agency, mobile and digital banking in the banking sector,” the CBK report says. During the review period, banks rationalized the number and distribution of ATMs for optimal services to customers. In July 2023, a total of 43 ATMs were mounted, while in December 2023, 23 had been removed.
Agency and digital banking services have been on the rise in the past decade, effectively replacing what was traditionally done by the ATMs and bank branches. Despite being basically cash-dispensing machines, ATMs have been upgraded to facilitate cash and cheque deposits, among other services. Agents, on their part, are essentially mini-branches that bring services closer to people either where they live or work.
This is an increase of 4,409 agents from the previous year to hit 82,780. Major retail institutions with large customer bases—among them Equity Bank with 40,211 agents, KCB Bank Kenya with 24,055, and Cooperative Bank of Kenya with 15,519—are the ones that engage most of these agents. All these agents offer various services that range from cash deposits and withdrawals to bill payments, balance inquiries, and fund transfers.
This has also led to a lesser requirement for ATMs and branch visits with the popularity of digital platforms, whether internet or mobile banking. 96 percent of the banks polled have developed or adopted some kind of mobile banking solutions in the form of apps or USSD services for banking and customer relationship management. It has seen a trend toward a reduction in cash handling and a consequent decrease in reliance on ATMs by way of this electronic transfer.
It is a trend, John Gachora, chief executive of NCBA Group, underscores: “There is less use of cash. We have become a lot more digital in terms of the use of cash, and this explains the decline in ATM usage by a very huge margin.”