Earlier today, the CEO of Equity Bank, Dr. James Mwangi announced the bank’s 2016 full year financial results. According to him, the results arise from a rather challenging banking environment in the country, owing to the failure of three national banks such as Chase Bank which was placed under receivership by the Central Bank of Kenya, the cashing in of Imperial Bank by its managers and the KES loss of customer deposits in National Bank.
Notably, concerns based on the environment including declining asset portfolio (stocks and bonds), low liquidity ratios (the bank is struggling to pay short-term obligations), capped interest rates and the generally strained the banking industry have been plaguing the progress in the banking sector. On the bright side, Equity bank has struggled to stay afloat of the aforementioned struggles, and this is manifested by a 4% before tax profit from KES 24 billion to 24.9B as by January 2017.
In particular, the bank owes much of these profits to its technological innovations over the past the few years especially in variable costs. For instance, the disbursement of loans through mobile money has seen a tremendous boost, thanks to the ease and accessibility of the services through Equitel in mobile phones. Out of the revenues raked from international money transfer, 27% came from from Equity BANK PayPal withdrawals. Equity Bank integrated this in 2013 with a South African bank, but has since gone ahead to directly integrate with Paypal reducing the turnaround time to 3 working days up from 8.
Equity’s mobile banking campaigns dubbed as EazzyBanking has reaped substantial results, thanks to providing a framework for self-banking to its large customer base. As of January 2017, the app has seen more than 160,000 Google Play downloads, with over 10 million transactions valued at KES 6.3 billion. Another digital solution referred to as EazzyBit that incorporates Small and Medium-sized Enterprises (SMEs) and Corporate Online Banking made 126,000 transactions of volumes up to KES 25.9 billion, not to mention EazzyNet that integrated Corporate/RETAIL Online Banking with its 39.4 million transactions valued at KES 2.7 billion.
It is apparent that the integration of ICT and innovation in the banking industry is fundamentally crucial in modern times, coupled with optimized staff productivity and significant boosts in the cost of income ration thanks to digitization.