The gains banks make from coin shortage

Steve (second name withheld) was at the bank recently and he witnessed an exchange between the teller and a customer.

The issue was that the customer had been short-changed by 30 cents and she didn’t take it kindly.

The teller was at pains trying to explain that he didn’t have the necessary coins to pay out the full amount.

Now we’ve heard of coin shortages in supermarkets and other shops, but not in a bank.

That’s a new one! And Steve would like fellow readers of this column to know that the cumulative “theft” through such excuses is colossal.

Indeed it is. According to the Central Bank of Kenya, there are 43 licensed banks in the country and they have a combined total of 1,065 branches.

If just one teller in each branch retained 30 cents from a customer every hour, how much would be stolen in one year?

Most banks open at 9 am and close at 3 pm, from Monday to Friday. This is a duration of six hours. Therefore they are open for 30 hours in one week; which works out to 1,560 hours in a year (52 weeks).

Thus, each teller would steal Sh468 per year (30 cents multiplied by 1,560 hours) and the combined total for all of them comes to Sh498,420 (Sh468 x 1,065 branches).

Make noise

Of course, 30 cents to an individual customer is a small amount of money and most people wouldn’t make noise about it.

However, when accumulated over all bank branches, it comes to almost half a million shillings!

Now let’s look at the situation differently: what if the teller decided to take in the loss by paying 50 cents instead of 30 cents?

The loss this time is 20 cents per transaction. This works to Sh1.20 per day per teller or about Sh70 per month (assuming about 4.3 working weeks per month). Would that be too much to ask of a teller?

Well, the answer depends mainly on the teller’s attitude (towards customers and employer) and to a smaller extent on his or her salary.

Whatever the case, it would be easy for a bank to put a policy of reimbursing the money lost without the need for documentary proof – it is smaller enough to be accounted for through petty cash.

The bank with the largest network has 165 branches, therefore, for them, the total loss comes to Sh11,550 per month or Sh138,600 per year.

Now that sounds like it’s a lot but when you consider this bank returned an operating income (not profit!) of over Sh20 billion shillings, the picture changes immediately.