Customer deposits in Kenyan banks in the first half of this year recorded a slower year-on-year growth as financial institutions continued to feel digital cash fever.

An analysis of financial results of listed Kenyan lenders showed overall customer deposits grew by 8.7 percent in the first half of 2019 as compared to 10 percent in a similar period in 2018.

The banks’ deposit growth drop was partly attributable to the convenience of mobile money has made a good number of people choose to save money, especially for short-term use, in their digital wallets instead of bank accounts, and easy access to digital credit has disrupted the saving culture in the East African nation, with many people seeing no need to save as they can readily borrow in case of need.

The worst-hit are lower tier Kenyan banks. Standard Chartered Bank’s deposits contracted by 1.02 percent in the first half of 2019 to 228 billion shillings (2.23 billion U.S. dollars) from 2.26 billion dollars, its financial results showed.

Mortgage lender Housing Finance was the worst hit, recording a 7 percent decline in customer deposits from 360 million dollars in the first half of 2018 to 336 million dollars.

Fred Lekoru, a motorbike taxi operator in Nairobi, is among citizens who are saving their money in digital wallets.

“I save money which I do not urgently need to use in my mobile account. This has helped me save money for my rent in particular,” said Lekoru, who notes he has a bank account but rarely keeps money there thanks to mobile cash convenience.

Kenyan banks have recognized the huge impact of digital cash and are using it to help mobilize and grow their deposits. Listed lender Kenya Commercial Bank is currently running a campaign to woo citizens to use its digital app to save cash and earn interest of 6.3 percent per annum.

Data from the International Monetary Fund (IMF) showed that Kenya’s gross national savings account for 12 percent of the gross domestic product, behind the sub-Saharan Africa average 17-19 percent. Enditem

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