internet banking

Online Banking in kenya Constraints to Growth

online banking in kenya has challenges that hinder the banking industry in kenya from being as competitive as the rest of the world. the online banking platform needs to be improved to afford the kenyan banker the benefits that can be derived from e-banking or online banking.

what is online banking in kenya



online banking in kenya is also known as e-banking and it involves the account holder performing banking services from an electronic device instead of being served by a bank official. Banking in kenya has developed with globalization and increased competition from local and foriegn banks.




constrainst of online banking in Kenya

  1. Security in banking is one of the major concerns for the banked. Many users of online banking are not fully convinced that the PIN they have been given is secure and that their transactions on online banking are not be affected by fraud and hacking.
  2. Some customers want to deal with human beings and not a machine. It is very hard for these customers to use online banking channels though they may be more convenient for them. These customers respond better to their bankers offering face to face services and feel that this is more specialised.
  3. Some bank customers have very little exposure to computers and information technology. These customers are therefore not comfortable using a computer to connect to their accounts. Since they do not understand how the computers work, they cannot trust them. These customers are mainly the older generations.
  4. Customers who open bank accounts do not know the full range of accounts that are offered by their banks. They are therefore not aware about the Online banking products. The bankers do not sell the full range of products to their customers. This lack of knowledge is a constraint to the growth of online banking.
  5. In many parts of the world there are challenges of constant and reliable network connections and power supply. This has slowed down on the growth of online banking especially in developing nations. To overcome this, countries are looking into alternative sources of power. The completion of the fibre optic cable project to connect Africa to Africa and the rest of the world will bridge the gaps in network connectivity.
  6. Online banking is a challenge to legislators since it is new and they have to come up with rules to govern these. Many legislators are challenged to write the legislation on an idea they are not familiar with and one that keeps changing constantly.
  7. Some customers prefer the comfort of seeing the paper money and not electronic confirmations. The customers see the hard cash and they either deposit it to their account or withdraw it. These manual transactions are a confirmation to them that their instructions have been followed.

To overcome the online banking constraints to growth above, banks must engage with their customers in training and explaining how online banking would affect them. They have to assure customers of security and the remedies that they would employ in case of reported fraud. The financial institutions have to train their staff on online banking and to sell these products to customers. The advantages of online banking should be understood by the users and potential users. The development of network connectivity is a global concern because globalization has enhanced cross boarder and offshore banking. the constrainst online banking in kenya must be urgently resolved to increase services to the kenyan banker.

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