A security guard at the entrance of KCB Bank at Imaara Mall in Nairobi on 21 September 2023. Commercial banks will continue expanding their branch network this year.
Commercial banks will continue expanding their branch network this year as consumers maintain their penchant for physical outlets to access key services, a new industry surveys showed.
Despite the increasing reach and liking for fully automated or self-service platforms including mobile, internet, and chatbots for their banking services, surveys by both the Central Bank of Kenya (CBK) and the Kenya Bankers Association (KBA) showed an irresistible bond between customers and physical branches.
Lenders indicated to CBK that they planned on increasing their staff count this year supported in part by branch expansion plans.
“Banks largely expect to hire more in 2025 supported by continued branch expansion and growth in business launch of new products and to replace exiting staff,” CBK’s market perception survey conducted in January notes.
According to the KBA 2024 customer satisfaction survey published yesterday, bank branches continue to be important, ranking as the third most preferred channel, behind only mobile and internet banking.
“Bank branches continue to be important, ranked third in 2024, reflecting sustained demand for in-person services, similar to 2023 where branches were also highly preferred but showed a slight decline,” the customer satisfaction report stated. Branch expansion means high costs for banks with industry estimations showing that it takes between Sh30 million and Sh50 million to open and operate a bank business in Kenya, depending on the size and location.
Bank outlets continue to dominate alternative channels such as card payments, cash deposit machines and ATMs.
Contact centres scored the lowest in 2024, reflecting the continued decline in preference for call-based support and signalling customers' increased choice for self-service and direct-in-person interactions over-the-phone support.
“These preferences imply a growing demand for integrated digital solutions while maintaining the relevance of physical branches,” the KBA survey added.
Most bank branches, however, remain concentrated in urban centres with 36.8 per cent in Nairobi County. Other regions with high bank concentration levels include Mombasa, Nakuru, and Kisumu while Meru and Uasin Gishu have are now emerging as significant regional nodes for local banks.
Samburu, Marsabit, and Tana River, meanwhile, have a low branch network reach, which points to the uneven distribution of banking activity in the country. The number of bank branches increased from 1,475 in 2022 to 1,511 in 2023 according to data from CBK.
Nairobi marked the highest increase in the number of branches during the period at 15.
Mandera, Samburu, Wajir, and West Pokot counties had the joint lowest branch count at four.
Banking sector staff levels meanwhile increased by 1,826 to 37,933 in December 2023 from 36,107 in 2022 with the bulk of jobs entailing clerical roles.
