This archive report was first published on 9 September 2019.
Published on September 9, 2019, the Kenyan banking sector has been undergoing significant changes with the rise of FinTechs. Traditional banks have faced challenges, including reputational issues, accounting and tax changes, and business restructuring. However, they have a rich history, scale, and experience that can help them stay relevant in the face of FinTech growth.
FinTechs, such as Jambopay and M-Pesa, have emerged as new players in the financial services landscape, offering innovative solutions to age-old problems. They are supported by financial backers and capital, and their marketing is sleek, with eye-catching brands and desirable images. Millennials and Generation Z, who are liberal and educated, want to put their money where their values are, and FinTechs have tapped into this sentiment.
However, FinTechs face challenges, including shepherding their organizations through periods of major growth, investment, and internationalization. Banks, on the other hand, are weighed down by old technology, heavily regulated and capital-intensive environments, and historic and reputational factors. But, while these factors are significant, they do not mean that the big banks are under threat.
Incumbents need FinTechs for innovation, while FinTechs need incumbents for scale. Many FinTechs have already teamed up with more established names for their mutual benefit. The services offered by FinTechs are not too far removed from those used for years, but they are delivered in a cheaper and more seamless way, consistent with a more dynamic, social, and tech-enabled population.
As a result, traditional banks are reconsidering their digital banking operations and footprint. Accountants and their advisers at bricks-and-mortar physical banks will need to stay close to change management programs, which continue to drive store and ATM closures, and tech change. They will need to flex their skillsets to tailor for new business and client demand.
Finance professionals should prepare for a future where incumbents work with challengers so that customers can benefit from the smoothest, digital experience and service, safe in the knowledge that their bank has centuries of experience to draw on.
