Kenyan govt. has urged banks to improve their banking by making appropriate investments in technology.
Muthai Kagwe, Kenyan Information Minister has challenged all operators in banking sector for making investments in advanced technologies, which will see speedy fund transfers, both locally & internationally.
The minister said that it is a big disappointment that international transactions can't be carried out via Visa & other such modes of transactions. International tourists or visitors coming to Kenya are not able to use their international credit or debit cards.
He rated money transfer feature as key factor of growth for the Kenyan banking sector in international arena. He said that there exists an enormous untapped potential in this segment of the banking sector.
Poor IT system in Kenya is already hitting banking sector with high salaries & wages. Moreover, there is one ATM, on an average, for every 100,000 Kenyan. Banks are reluctant to share ATM systems with other organizations due to competition. Banks need to make significant investments in building their ATM networks & must reach a mutual agreement so that banks can share each other's ATM networks.
Moreover, a poor information & communications network with higher operating costs is hindering the growth of the sector. For instance, it takes nearly four months' turnaround time for a loan to get processed & around a month to liquidize shares on Nairobi Stock Exchange.
Apart from technological limitations, market restrictions, dropping interest margins, poor infrastructure & communication, high security spending & improper judiciary are the major challenges for Kenya's banking sector.
A banking sector expert at RNCOS said, "Despite the setbacks, Kenyan banking sector has a lot of potential. New legislation, fresh strategic directions & a new ICT infrastructure will be key factors of growth for the sector."
The minister has also cautioned consumers to beware of unlicensed operators for making transactions. He warned that consumers are doing this at their own risk, as the process isn't regulated by the govt. & such transactions are also denying revenue to the govt., which is utilized for nation's overall development.
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