Business

Number of ATMs falls to 11-year low as digital banking takes over

A user on the mySafaricom App. (Photo: Tech-ish.com)

By Ibrahim Omar | Sunday, February 4, 2024

CBK last year granted Safaricom, Telkom and Airtel approvals to increase the daily money transaction and account limits.

The number of automated teller machines (ATMs) being used to withdraw cash has declined to the levels last seen 11 years ago as customers shift to more convenient digital banking channels.

According to data from the Central Bank of Kenya (CBK), the number of ATMs installed by commercial banks dropped to 2,282 in December 2023.

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Banks closed 19 ATMs last year, bringing the number of cash dispensing machines down from 2,301 in December 2022.

As a result, the current number of ATMs that are in use is the lowest since October 2012.

ATMs were once used to symbolise convenience in cash withdrawal or checking bank balances compared to getting the same services from banks which had long queues of customers waiting to be served.

But times have changed with mobile and digital banking – as well as agency banking which was introduced in 2010 – revolutionising banking.

Digital banking has made the process of making payments convenient at the push of a button, and customers are making fewer trips to ATMs.

As a result, banks have been closing their ATMs gradually, a trend that has been recorded by the CBK in recent years.

“The number of automated teller machines (ATMs) decreased by 65 (2.8 per cent) to 2,301 in December 2022, from 2,366 in December 2021,” said the CBK in its Bank Supervision Annual Report 2022.

It added: “The decrease in ATMs in 2022 is a result of the adoption of agency, mobile, and digital banking in the banking industry.”

The latest count means banks have shut down 370 ATMs since March 2016, when the number hit a peak of 2,652.

Mobile money wallets are increasingly preferred in the financial services sector, with banks and mobile money firms complementing them through agents.

The technology, once introduced in Kenya during the 1990s to decongest the banking halls, is experiencing a continued drop in popularity.

Digital banking numbers

Digital banking as well as mobile money payments have become king in Kenya’s financial sector. According to CBK data, the value of mobile money transactions in December 2023 hit a record at Sh788.35 billion.

This was fuelled by more customers opening new mobile money accounts—an increase of 4.14 million in 2023—to close the year at 77.26 million.

Further, the number of agents who enable seamless money deposits and withdrawals crossed the 300,000 mark in June 2021 and stood at 322,404 in December 2023.

The use of mobile payments skyrocketed at the onset of the COVID-19 pandemic in mid-March 2020 with the waiver of charges on low-ticket transactions to reduce the use of cash.

Many customers continued to use digital transactions even when CBK reinstated charges early last year.

CBK last year granted Safaricom, Telkom Kenya, and Airtel Kenya approvals to increase the daily money transaction and account limits, marking a further boost to the profile of mobile transactions in the financial sector.