Sunday, April 27, 2014

Huduma: The Bank Branch of the Future?

A visit to a Huduma centre showed that a shared building or hall where different banks serve their customers  may be the future of the bank branch. 

Despite new mobile, ATM, and internet channels, customers still need to come into bank halls quite a bit, as seen by the queues at beginning and end of each month. A lot of this is because customers need to bring and and remit payments that end up going to other banks either via direct deposit, cheques, or RTGS. Does the money need to physically move? No But the customers do, going from building to building to do single transactions at many banks. 

It helps if you have a place like Sarit centre which is an banking attractive destination because it has so many bank branches under one roof, with many more in adjacent buildings.
Can banks share a hall like a Huduma one, and second some staff there to serve their customers in such a centre?. This way they can share the cost of security, which can be handled by armed guards outside, and leave a friendly customer interface inside that is devoid of bullet-proof glass (like some Uganda bank halls)

Every bank that has a branch network incurs a repeat of the same costs of staff, security, cash handling, advertising signs, stationery  etc. They also have building leases, insurance, and fees per branch or outlet  - such Kshs 65,000 or $765 per year for an ATM license in Nairobi County.
Big banks have invested in big branch networks, but can smaller banks share halls in new neighborhoods or towns like Eastleigh and Kiserian that experience rapid growth, and the banks have to catch up. Shall we see a bank hall or post office hall in such a place with 20 desks, and 20 sets of staff for 20 different banks?

There are some signs of this coming:
  •  One is the precedent that Kenswitch set, in which about two dozen small banks and financial institutions got together to share an ATM network that their customers can all use. 
  • Another example is large hardware, pharmacy, and agro-vet stores in rural Kenya that  simultaneously act as agents for several banks (which they can do as bank agents, but not mobile money agents). 
  • Another is the trend of Nairobi malls grouping as many bank ATM’s in one area e.g. at Galleria and Junction malls. There is no true saving yet as each bank still has an idle security guard to ‘look after’ their machine.

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