According to Mr. Muthui, there is one bank for every one million Kenyan residents. On the other hand, the picture is quite different in other more developed African states such as South Africa and Nigeria.
Nigeria – One bank for every ten million residents
The recent consolidations and receivership of Kenya Commercial Bank (KCB) and National Bank of Kenya (NBK), the Chase Bank and Imperial Bank deal, and the CBA and Jamii Bora buy-outs, all of which were market driven, is only a first of many to come in Kenya as the need for scale-able digital capabilities, market power, funding costs, and lower operating costs increase.
According to the CEO of Kenya Bankers Association (KBA), Habil Olaka, smaller banks serve a very specific market segment and need to continue running. Consolidating smaller banks into larger ones in this case, might lead to a gap in servicing this specific clientele niche.
“Increased consolidation in the sector should see the formation of banks that have an adequate capital base, which will provide them with the requisite cover to partake in core banking activities, thereby catalyzing economic growth and development in the country. Furthermore, with an aggregate adequate capital cover, the banking sector will remain resilient to any internal or external systemic shocks that may affect the sector. Thus, it would be ideal for the sector to have even fewer, but stronger players.