Slow death march of the bank branch?

What you need to know:

  • When you go to many bank halls, you often find more staff than customers.
  • Banks also deter customers when they stack costs on to digital transactions.
  • Customers have adopted online banking and contactless cards.

It is now inevitable. When you end up in a bank branch, you get to hear a lesson about new features that the bank has rolled out.

The purpose is to get you away from sitting in a queue to do a transaction at the bank teller window and instead try it elsewhere.

A few weeks ago, a guard at one bank branch persuaded several of us to try to do our cheque deposits at the ATM outside. The branch was quite empty, but the novelty was too good to pass on.

It took a few steps to use the machine, entering the account number of the company you are paying, and then your name as the payer.

There were no forms to fill, and after the cheque was accepted by the ATM, it printed out a confirmation slip.


Large banks like KCB now have ATMs capable of accepting cash deposits of up to Sh500,000 ($5,000). But who would want to display all that cash in front of strangers?

When you go to many bank halls, you often find more staff than customers. Except at the end of the month.

This is a sharp turn from a decade ago when banks like Equity and Co-op were legendary for the length of their queues.

Customers who transact on ATM, mobile phone, and over the internet still have the occasional need to come to a bank branch.

A 2018report by FSD Kenya on the cost of banking showed that banks are nudging customers to use digital channels over branches by offering them lower charges.


Such a move could amount to saving Sh10,000 a year.

Yet customers still prefer to transact at the branch with 6 per cent of them using branches ahead of ATM at 43 per cent, mobile banking at 18 per cent and just one per cent using online banking.

It found that, while banks informed customers of the cost of transacting at branches, the staff at banks were unfamiliar with the cost that their banks charged for customers to use alternate channels like agents, mobile. ATM and Pesalink.


Banks also deter customers when they stack costs on to digital transactions such as Sh28 to receive an SMS from one particular bank.

But the economics are gone and commercial landlords are on notice.

You now have banks relocating to upper floors of malls which are less costly.

Malls have also taken to clustering all bank ATM’s in one corner, preferably upstairs. This does take away ground floor space and it pulls customers to walk by other stores as they ascend to transact at the ATM.


In Kenya, the 2018 Bank Supervision Report by the Central Bank showed the number of bank branches reduced by 13 to 1,505 in 2018. This was attributed to the adoption of alternative delivery channels such as mobile banking, internet banking and agency banking.

Also, while the number of employees increased by 983 to 31,889, clerical staff decreased by 400. Management and supervisory staff increased by 800 but that will probably turn with the recently completed mergers in the banking sector.

The UK has seen one in three bank branches close in the last four years – a total of over 3,300 branches gone, with NatWest removing 52 per cent of its branches in the last two years.


Customers have adopted online banking and contactless cards.

The US has had less technology adoption but, thanks to mergers and consolidations, still saw 1,800 branches closed in both 2017 and 2018.

What is the likely way forward for the bank branch?

Banks no longer need the large spaces that branches take.

And there is a lot of redundancy as every branch needs cash replenishment, staff, advertising, security, insurance, county license fees, and building leases etc.

One solution is to have banks share branch spaces.

Like Huduma centres, several smaller banks can come together and take up space in a prime destination like a mall and each with a small desk to do their services.

Smaller banks already share ATM’s and payment networks, so why not branch space and staff too?