Mobile money and agency banking have eclipsed the use of automated teller machines (ATM) in Kenya, pointing to a near-end of the gadget that redefined east African nation’s banking in the 1990s.
The two services, introduced in Kenya in 2007 and 2014 respectively, are now favoured for withdrawing and depositing money by millions of Kenyans, new data shows.
Banks have consequently been forced to reduce the number of ATMs across Kenya, with the number of the machines falling to a six-year low at the close of 2019, data seen from Central Bank shows.
It is a twisted change of fortunes for the ATMs in Kenya, whose usage remains high in the developed world where mobile money is yet to catch up.
There were 2,459 machines at the end of 2019 in Kenya, with the number declining by 70 during the year, according to the Central Bank.
Kenyans transacted 4.35 trillion shillings on mobile money in 2019, the highest since the launch of the technology in 2007.
The 42 commercial banks in the East African nation and five micro-finance institutions have contracted over 60,000 agents to transact their services, further easing demand for ATMs.
On Monday, at a shopping complex in the central business district in Nairobi, an ATM booth that belongs to a leading bank stood next to three mobile money agency shops.
Bernard Mwaso of Edell IT Solution in Nairobi noted that ATMs are facing the fate of many other gadgets including phone booths, which were overtaken by new technologies.
“I can compare the fate of the ATMs in Kenya to that of phone booths, which were pushed out by mobile phones. Mobile money in particular guarantees convenience because one not only accesses the services on their phones but also next door when it comes to making deposits,” he said, adding that ATMs don’t offer convenience because they are located in fixed locations.
All Kenya’s 42 banks have linked their services to mobile money, making customers have no reason to visit ATMs because they can withdraw cash from their accounts via mobile phones and spend it virtually.
“We conducted a survey and found that most customers prefer self-service digital banking and have a higher preference for convenience in payment platforms and access to loans,” James Mwangi, the chief executive of East Africa’s Equity Bank.