Banks close gap with mobile money wallets as Kenyans shift to mobile apps

Banks are closing the gap with mobile money wallets in Kenya's payments market, a surprise shift in a sector long dominated by mobile money, a new survey shows.

The survey from Integrated Payment Services Limited (IPSL) found that 41.54 per cent of Pesalink users prefer mobile banking apps for regular payments, narrowing the gap with 50.15 per cent who favour mobile money wallets.

The findings challenge the long-held dominance of mobile money services in the country.

"We know that companies relying on Kenyans carrying a physical wallet, or cash, are facing an uphill battle. It is interesting to see that mobile banking apps are so close in popularity to mobile money wallets among Pesalink users," IPSL CEO Gituku Kirika says.

The survey, commissioned to assess account-to-account (A2A) payment trends, attributed the shift to convenience and speed, the top priorities cited by consumers.

Fees, security and privacy ranked equally as secondary considerations, while rewards and loyalty programmes emerged as low-priority incentives.

Multi-banking emerged as another key trend, with 57 per cent of respondents using more than one bank for instant payments.

The findings position Kenya among markets with higher multi-banked populations.

"We have known that Kenyans are more multi-banked than many other markets. We are surprised to see so many people using multiple banks for their daily payments," noted Kirika.

"The challenge for banks is that customers are more likely to switch their payments to a convenient and faster offering."

The Central Bank of Kenya (CBK) is spearheading a Fast Payments System (FPS) to enhance interoperability across payment platforms, a move expected to lower costs and boost transaction speeds.

Kenya’s digital payments market grew 35 per cent in 2024, making instant payments the fastest-growing payment type, the survey found.