Agency and digital banking services have grown in popularity over the last decade, taking some of the functions that would have traditionally been offered at ATMs and bank branches.
Kenyan banks have continued to close ATM machines despite opening more branches, indicating the reduced use of the equipment in serving customers’ cash needs.
They closed 19 ATMs last year, reducing their number to 2,282 from 2,301 in 2022, according to the latest banking sector annual report published by the Central Bank of Kenya (CBK).
This was despite the number of branches rising by 36 to 1,511 from 1,475 over the same period.
Banks, which previously had one or multiple ATMs attached to each branch, have been scaling down the number of the cash dispensing equipment and eliminating them altogether at some outlets.
The CBK says the decline in the number of ATMs is due to increased usage of alternative banking channels.
"The number of ATMs decreased … as a result of the adoption of agency, mobile and digital banking in the banking industry," the report says.
There were additions and closures of ATMs across the country through most of last year, reflecting the effort by banks to optimise the number and locations of the machines to serve their customers.
The most additions were in July 2023 when 43 ATMs were installed. The biggest reduction was recorded in December 2023 when 23 ATMs were taken out of service.
Agency and digital banking services have grown in popularity over the last decade, taking some of the functions that would have traditionally been offered at ATMs and bank branches.
ATMs mostly offer cash withdrawal services but have been upgraded to do more including accepting cash and cheque deposits. Agents play the role of mini branches, serving customers in proximity to their work or residences.
Banks added 4,409 agents last year to reach 82,780, with most of them contracted by the major retail institutions with millions of customers.
“Over 90 percent of the approved bank agents were concentrated in three banks with the largest physical branch presence namely, Equity Bank with 40,211 agents, KCB Bank Kenya with 24,055 agents and Cooperative Bank of Kenya with 15,519 agents,” the report says.
The agents offer multiple services such as cash deposit, withdrawals, payment of bills, account balance enquiries and transfer of funds.
Digital platforms including internet and mobile banking have also helped reduce the need for ATMs and visits to banking halls.
The report says that 96 percent of the banks surveyed had adopted or developed a mobile banking solution (app or USSD) for banking and customer relationship services, further reducing usage of cash and ATMs.
“There is less use of cash, we've become a lot more digital in terms of use of cash and this is why ATM usage has declined significantly," said John Gachora, NCBA Group’s chief executive.
