By Otieno S.
Kenya’s financial institutions and particularly the banks are being left behind – not only in technology advancements and big data, but also in the implementation of innovation labs.
That’s according to PricewaterhouseCoopers (PwC) latest report on Banking in Africa Matters, which found that local banks are still not prepared to set up innovation labs with just a handful having already adopted technology and big data to reduce all manual tasks and risks attached to information and data security.
Although banks operating in Kenya have considered implementing innovation labs, the report noted that majority of banks operating in Kenya have decided not to go through with it – feeling they have not yet reached the critical size to make it worthwhile to set up an innovation lab.
“Fraud risk is a major concern in Kenya and other mature markets in Africa. In the meantime banks in these countries rely on external innovation,” read the report which captured Kenya, Nigeria and South Africa.
The report also found that most banks are inadequately investing in technology with banks operating in Kenya allocating just 4 per cent of their technology budget to big data investments, compared to South Africa’s 6 per cent of their total technology investments in big data developments.
With proper infrastructure in place, the report says that the banks can crack among other concerns spanning credit risks, such as defaulting loans, operational risks, such as inadequate or failed internal processes, people or systems and external risks, such as deteriorating market conditions or currencies.
Kenyan banks, according to the report has this year grown faster than their African peers, with an average increase of 33 per cent in Tier 1 capital, and are well above the sub-Saharan African average.
The growth was attributed to a stable domestic currency, local economic growth and demand for more diversified products by middle-class customers.
Electronic banking is regarded as the most important segment by these banks over the next three years.
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