CBK has said 96% of transactions happen outside the bank branches in Kenya from 91% before the COVID-19 pandemic struck.
This disclosure was made by CBK Governor Dr Patrick Njoroge while making his remarks at the Agile Regulation for Digital Transformation(A.Reg 4DT) webinar organised by the World Bank.
Dr Njoroge also said the number of bank transactions on mobile phones has increased from 56% to 85% of all transactions.
He said Digitization is breeding a new generation of services that mimic financial services. While these services may lead to enhanced access for unserved and underserved segments of the populace, Dr Njoroge said they pose considerable consumer protection concerns.
A case in point is the growing proliferation of unregulated digital lending apps, competing directly with banks.
“These apps have been flying below the regulatory radar, as they are not deposit-taking, the traditional threshold for regulators to take note. However, they are posing enormous consumer protection concerns due to among others high interest rates, over-indebtedness, unethical collection practices and personal data abuse.
These concerns, says the CBK, are now spilling over to a loss of trust in the financial system.
He added that one of the spillover effects of the global financial crisis was the emergence of decentralized finance (De-Fi). The promoters of De-Fi sought to leverage the loss of trust in governments and financial institutions, particularly in advanced economies.
This saw the emergence of cryptocurrencies, headlined by Bitcoin, positioned as alternative payment instruments. This later morphed to stablecoins and more recently, there has been the growing discussion on Central Bank Digital Currencies (CBDCs).
Recently, cryptocurrencies have morphed into more of wealth management instruments and lesser of payment instruments.