Challenges facing the banking industry in Kenya

  

Date Posted: 11/10/2012 8:59:04 AM

Posted By: wameyo99  Membership Level: Silver  Total Points: 345

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Most Kenyan banks are making large profits as can be seen from their financial reports, but this does not mean banks do not have their fair share of challenges. What are some of the challenges facing the banking industry in Kenya? Read on to find out.

ATM Card Skimming

Of late there have been numerous cases of people being ripped off their money through card fraudsters. These fraudsters no longer use force to get your card details. What they do is install gadgets in ATM machines which are able to capture/steal your card information when you use your ATM card. Once they have your card information, they are able to use that to withdraw money from your account. These rising cases of fraud have seen local banks experience great losses because they often have to compensate their customers.

High cost of borrowing

The cost of borrowing is still high and Kenyans are finding it very expensive to borrow money from banks. The interest rates in local banks are still high and unless these rates go down, Kenyans will shy away from borrowing money from banks. This is quite a challenge because loans are a major source of income to the banks.

Theft cases

There have been a lot of theft cases in the banking industry. Banks have lost lots of money stolen from them by their own employees, their security providers, and other external individuals.

Competition from mobile money transfer services

Local mobile money transfer services like Mpesa and Airtel money have brought in a lot of competition to banks. Since their introduction, many people are finding it easier to save and transfer money through these mobile money transfer services as opposed to banks.

In as much as local banks are making profits, there is still room to realize more earnings if some

of these issues are addressed. Banks should address these issues fast; especially card skimming so as to avoid further losses.

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