Central Bank of Kenya
Chapter II Developments in the Banking Industry in 2006 2.1
Introduction
The continued expansion of the banking industry has witnessed a 23.7% increase in the number of employees compared to last year. The industry has further increased the number of banks that have invested in new electronic banking applications. The salutary effect of this has seen a shift from the traditionally conservative industry experiment to diverse new electronic based products. After many years of being seen as unprofitable business, there is renewed interest in the Small and Medium Enterprises (SMEs) segment with a growing number of banks investing in branch expansion networks in the otherwise previously un-banked rural and remote town centres. 2.2
Advancement in ICT has seen evolution of electronic banking products
Developments in Information and Communication Technology (ICT)
During the year, institutions continued to invest in ICT infrastructure with the objective of improving quality of customer service through offering alternative ICT based products and delivery channels. Some of the new developments in this area include introduction of E-Banking and SMS-Banking Softwares by a number of institutions. Installation of additional Automated Teller Machines (ATM) and expansion of the networks countrywide during the year was also a significant development. The growth of ATMs is expected to decongest banking halls and reduce incidences of long queues in banking halls. ICT based financial services have made a significant contribution in lowering the cost of offering financial services. 2.3
Bank Charges and New Products
Under section 44 of the Banking Act, no institution can increase its rate of banking or other charges except with the prior approval of the Minister. To streamline the procedures for approval of bank charges, the Minister of Finance published regulations in May 2006 under Legal Notice No. 34 that delegated the approval of bank charges to the Central Bank.
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Bank Supervision Annual Report 2006