This report, based on statistical market analysis, provides highlights on the structure of the Kenyan banking sector and supervisory developments, macroeconomic conditions and banking sector performance and regional and international developments initiatives. The banking sector is projected to remain resilient in 2019. Banks are expected to continue reviewing their business models and delivery channels prompted by disruptive technologies.


The year 2018, according to the CBK governor, was a year of robust economic growth in Kenya, owing to increased agricultural production, accelerated manufacturing activities, sustained growth in transportation and vibrant service sector activities. These favourable factors as well as stiffer competition from big tech platform companies due to changing customer expectations and behaviors have made Kenya a prime target for criminals, money launderers and terrorists that aim at leveraging on Kenya’s sound attributes to execute their reprehensible deeds.

Developments in Information and Communications Technology (ICT)

CBK has not been left behind in exploring benefits of fintech. CBK has embarked on initiatives to enhance its supervisory practices by leveraging on Regulatory Technology (Regtech) and Supervisory Technology (Suptech). This will enhance surveillance of the banking sector.

Automated Teller Machines (ATMs)

The number of Automated Teller Machines (ATMs) increased by 37 (1.32 percent) to 2,833 in December 2018 from 2,796 in January 2018. This increase in ATMs in 2018 reflects the deliberate decision by banks to avail convenience to customers at strategic locations. The increase in use of technology by banks has been driven mainly by stiff competition among the banks.

Emerging Technological trends in the Banking industry and their expected impact.

  • Cloud computing: CBK recognizes that cloud services are increasingly becoming an important option for financial institutions’ technical infrastructure and budget management. Thus CBK expects that any implementation of cloud services is undertaken with appropriate due care and attention ensure compliance with regulatory and data protection requirements, often across multiple jurisdictions.
  • Data Centre Outsourcing: A number of Kenyan banks have out sourced the hosting of their secondary (disaster recovery) data centres to Data Centre colocation service providers. It is important for banks to evaluate service providers in terms of commitment to quality/service level agreements (SLAs), proven competencies, price, data confidentiality, technology fit and scope of resources.
  • Customer Data Protection: Recently, in Kenya, the data protection bill has been approved as the need for guidance in the protection of customer data was realized, companies will now have to inform users of any personal data they are collecting, the purpose for collecting that data and how long the same will be stored. The law also gives users the right to decline to have their data collected or processed as well as demand to have false data corrected or deleted upon demand.
  • Growth in Digital Banking: The digital banking space has grown at an accelerating pace in recent years. Since the launch of the M-Shwari platform in 2012, a vast number of platforms offering similar services have emerged.
  • Artificial Intelligence: The growth in digital banking and in particular digital lending can be enhanced by the adoption of algorithms that leverage on emerging technologies such as artificial intelligence (AI). AI can be used in analysing consumer financial behaviour especially on income trends and spending patterns. This in turn will aid financial institutions in making more accurate underwriting decisions, which results in the reduction in loan defaults.
  • Leveraging on Big Data: Digital banking eases availability of large volume of customers’ financial data stored in a common database. This enables institution to leverage on big data analytics to profile customers such as assessing their financial needs for the purpose of loan applications.

Mobile Phone Financial Services

In the last decade, Kenya has indeed witnessed an unprecedented upsurge of technology. This is largely driven by MobilePhone Financial Services (MFS). The pioneer MFS provider in Kenya was Safaricom’s M-PESA platform introduced in 2007 through the “test and learn” approach. This approach allowed the technology enabled financial innovation to foster financial inclusion and setting the pace for a digital economy, while at the same time considering emerging financial stability concerns through analysing and mitigating existing and potential risks.


In conclusion we see that financial technology (fintech) is not only introducing efficiency in banking but also cost cutting and convenience to the customers. But this is has led to growing vulnerabilities. But the CBK undertook several measures aimed at safeguarding public interest and maintaining the integrity of the financial sector, these are:

  • Adoption of a Risk-Based Supervisory Framework for Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) to complement the existing prudential regulatory framework.
  • Amendment of the Proceeds of Crime and Anti-Money Laundering Regulations 2013 to allow preventive measures such as customer due diligence, record keeping to apply not only to Anti-Money Laundering activities, but also to measure for combating terrorism financing; and to oblige financial institutions to have policies and procedures for non-face-to-face business relationships.
  • One of the designated AML/CFT supervisors under the Act has been empowered to administer fines, penalties on institutions as well as individuals who have violated the Act.

We, Salaam think that CBK is doing a great job at mitigating and preventing the banking sector from cyber-attacks thus maintaining financial integrity of the banking sector.