Data from the Central Bank of Kenya indicates that in seven months of the year, financial institutions have closed 35 ATMs, from 2,459 available in January to 2,424 in July.
The highest number ever recorded was in March 2016 when the industry had a total of 2,652 machines before the scale down began.
The once popular teller machines especially among card-holding Kenyan bourgeois enabled users to conduct transactions without having to visit a bank is now facing disruptions and uncertainties as more customers embrace mobile money while banks direct heavy investments towards alternative digital payment channels.
While it is still hard to pin-point the reason for decline in the popularity of ATMs, the outbreak of coronavirus pandemic is seen as a potential contributor given the health safety measures which restricted movement of people in a bid to contain the virus.
“The containment measures that were put in place affected all services including banks. Physically, staff were unable to come to the office and so we had to continue serving customers through alternative channels which picked up in popularity,” Kenya Bankers Association CEO Dr. Habil Olaka said.
According to one of the tier one lenders, payments through alternative channels is now at 80 percent with increased adoption of mobile banking and internet banking which have brought convenience and efficiency as opposed to ATMs.
“The COVID-19 pandemic limited the use of physical cash. That definite push away from physical cash to digital platforms could have been a factor. ATMs are generally a way of getting physical cash to the customers,” Dr. Olaka added.
Official data further shows that at the start of the last decade, the total number of ATMs in Kenya stood at 1,730 and by December 2020, the number fell to 2,459 indicating a slow yet stealthy death of one of the most revolutionary technologies in the financial sector.
On the other hand, the number of all cards including ATM cards, credit card, charge cards, prepaid cards, debit cards have fallen by 476,478 in seven months to July to stand at 11,105,477.
The Kenya Bankers Association further attributes the decline in ATMs in Kenya to a shift in technology of the machine itself.
“When new technology comes, any replacement w-ill normally be with the later technology rather than the old ones. Any old one you want to discard will not be replaced,” Dr Olaka said.
The rise of mobile money amid health crisis
Official data from the Communications Authority reveal that in three months of the year, at least Kshs 2.3 trillion was transacted on mobile money by 29.1 million active mobile money subscribers using M-pesa, Airtel Money and T-Kash.
The value of transaction has been tipped to rise on account of COVID-19 pandemic.
“The fact that mobile money uptake has been pushed up by the pandemic there was a deliberate move by banks and regulator to move away from physical cash to digital platforms, so mobile money just picked up as a way of ensuring you don’t touch money,”
However, KBA says despite banks reducing investments in new Automated Teller Machines, cash will still remain king for a significant part of the economy.