Why Your Banks Will be Closing ATMs Soon?

In recent years, Kenya’s financial landscape has witnessed a remarkable shift. A new report from the Kenya Financial Sector Stability Report, released in September 2023, has unveiled a surprising trend – the closure of a significant number of Automated Teller Machines (ATMs) by Kenyan banks.

In the span of just one year, from December 2021 to December 2022, the number of active ATMs in the country plummeted from 2,366 to 2,301. But what’s driving this shift?

The answer lies in the rapid rise of mobile money payment channels. These platforms have swiftly become the preferred method for conducting a variety of financial transactions, including receiving salaries.

While it may seem counterintuitive, the number of ATM cards issued in the same period has actually increased.

So, what’s behind this intriguing phenomenon?

The Kenya Financial Sector Stability Report highlights a key factor: the adoption of point-of-sale (POS) terminals, especially in supermarkets and other businesses.

These terminals are where customers execute payments for goods or services, and they’ve gained traction as a convenient alternative to cash transactions.

Notably, many Kenyans opt for ATM cards or mobile money payments when completing their purchases at these points of sale.

But why are Kenyan consumers leaning towards these newer payment methods over traditional ATM cash withdrawals? One primary reason cited by customers in the report is the cost-effectiveness of digital payments.

It appears that the overhead charges associated with swiping cards or making mobile money transactions are considerably lower when compared to withdrawing cash from ATMs.

Over the past decade, mobile money transactions have been on a gradual incline. This trend has touched even the most remote parts of Kenya, where the adoption of smartphones is increasing, allowing residents to access digital financial services with ease.

In 2022, mobile money transactions reached a staggering Ksh7.9 trillion, and the number of new money agents in the country soared to 19,711.

This shift in preference towards mobile money payments has not only revolutionized how Kenyans transact but has also driven banks to reevaluate their ATM networks. As the demand for traditional ATMs decreases, banks are reallocating their resources and investing in digital payment solutions.

In conclusion, the decline in the number of ATMs in Kenya is not a sign of a shrinking banking sector but rather a testament to the country’s adaptability to the digital age.

The convenience, cost-effectiveness, and widespread accessibility of mobile money and point-of-sale transactions have reshaped the way Kenyans handle their finances.

As Kenyan banks continue to evolve to meet the changing needs of their customers, the role of the trusty ATM is undergoing a transformation, adapting to the new financial landscape of Kenya.

Source (https://www.kenyans.co.ke/)