Ask your Question: Joshua Oigara

In this interactive series, we invite readers to send in questions to select public figures. This week, Joshua Oigara, the group chief executive officer and managing director of Kenya Commercial Bank, responds to your questions.

The Movable Property Security Rights Act 2017, by which Kenyans can use household goods, crops or animals to secure bank loans, is now in place. Will KCB make deliberate efforts to ensure easier borrowing considering the barriers that small business borrowers have gone through since interest rates were capped? 

Chris Mwangi, Tharaka Nithi

We have always received movable assets as security for our loan products. Each application is considered on its own merit. If a customer has, for instance, invested in a dairy farm, the immovable and movable property will count in the assessment. KCB Bancassurance offers agricultural insurance cover which enhances the appeal of livestock, for instance, as security for loans. Please feel free to visit any of our branches with an application and we will be happy to attend to your request and advise what product best suits your needs.

I have to say that I admire your leadership at KCB and this always inspires me to want to partner with the bank. I, therefore, did all I could to make sure that my company is prequalified to offer tracking services for the asset financing section. After the presentations and the due diligence we signed Service Level Agreement (SLA) in 2016. The details of the SLA indicate that we would be apportioned the orders available and that we should not influence the distribution of the orders. Unfortunately, to date we have never been called upon to offer the tracking services to any of your clients. My polite question is: Should we patiently continue waiting and for how long? 

Gilbert Odadi, Gaptech Solutions Limited

Hello Gilbert. Thank you for believing in KCB Bank. We partner with thousands of businesses to provide services to us, and we pride ourselves as an equal opportunity institution. Now that you have already been pre-qualified, we will be happy to do business with you once an opportunity arises in your area of expertise.

Sir, when the government assented to law capping the interest charged on loans, you were on record as promising that there will be no job redundancies at KCB. Why then did the bank initiate the process of laying off more than 500 staff? 

Andrew Maranga Ratemo, Malindi

 Hello Andrew. KCB Bank has over the past two years been reviewing its operations in an effort to improve efficiency, serve our customers better, and meet the expectations of our shareholders. The review is an ongoing process and has been done in keeping with the best business practice in an industry that is undergoing a major transformation driven by fast evolving technology changes and a dynamic regulatory regime. The bank is currently offering a voluntary buyout programme for employees considering early retirement. This is expected to save the bank an estimated Sh2 billion per annum and should recover buyout costs within 18 months. The programme is expected to align the competing needs of adapting to a banking industry whose outlook has been dimmed by legislative and regulatory reforms, and fast evolving technology platforms that are now attracting non-traditional players into the financial services sector. The buyout package offers generous severance terms comparable with industry and labour law stipulations.

Why is it that we do not see many Kenyans being declared bankrupt on account of failing to repay bank loans when it is known for a fact that we have many defaulters who have helped in building massive bad debts for banks over the decades? 

Githuku Mungai

Our focus is on growing people and businesses. Suing customers for bankruptcy is never a desirable choice whenever we are dealing with our customers who are in distress. We therefore evaluate each case on its own merit. To ensure we minimise possibilities of distress, we have a robust credit risk management system in place which we review regularly. We have also developed dynamic internal risk rating models which are applied to borrowing customer accounts. The bank continues to enhance the credit assessment processes so as to save time, effort and resources while protecting the bank from default. Additionally, we have in place efficient debt collection processes.

Kenya does well in athletics but not in football. This is due to lack of proper talent nurturing. I propose that as a market leader in banking, KCB rallies other banks to set up football academies in counties. Is this a possible gesture from banks as part of your corporate social responsibility? 

Ichenga Mugao, Tharaka Nithi

Ichenga, thank you for your suggestion on an industry-wide approach towards sports sponsorships. At KCB, we have strategic partnerships and sponsorships in the sports sector. Currently, we have a women’s volleyball team, a men’s rugby team, football team and chess team. We also sponsor motorsports and golf. With this, we empower communities and provide opportunities, especially for the youth who are the majority in our population today. We believe that as a business, we exist not only to make profits but also to transform communities, in this case through sports sponsorships. As a result of this investment, we have over the years built a critical mass of sports talent in local, regional and global competition. We will continue with this commitment.

What has been the reason(s) for the bank’s failure or delay in issuing some of the agents with point-of-sale machines? Customers are complaining and we have no information. 

Isaac Muchangi, Kianjokoma, Embu

Thank you Isaac for raising this issue. Our goal is to enhance processes and promote efficient service delivery. Such instances as you have mentioned above are dealt with on a case by case basis because every agent is unique. We are consistently enhancing our efficiencies to ensure our partners like yourself are served on time and supported.

In recent times, KCB alongside other established banks were said to be facing stiff competition from the new comers like Equity Bank among others. How is the situation like today? 

Francis Njuguna, Kibichoi

Competition is healthy because it helps businesses stay on their toes and improve the customer experience. Whenever competition heats up, it means that the beneficiary is the customer because they get a wider bouquet of services that are competitively priced. We therefore welcome competition. It is in our interest. We believe we are doing something right for our customers because we are not only East Africa’s largest but also oldest commercial bank having been established in 1896. Over the 120 years that we have been in existence, the bank has grown and spread its wings into Tanzania, South Sudan, Uganda, Rwanda, Burundi and Ethiopia supporting customers and businesses in the seven countries. Today KCB Bank Group has the largest branch network in the region of over 250 branches, 962 ATMs and 13,562 agents offering banking services on a 24/7 basis in East Africa. This is complemented by mobile banking and internet banking services with a 24-hour contact centre services for our customers to get in touch with the bank. KCB has a wide network of correspondent relationships totaling over 200 banks across the globe and our customers are assured of a seamless facilitation of their international trade requirements wherever they are. With this foundation, we are still able to stay ahead of the curve in serving our customer needs.

How does someone apply to be considered for internship at KCB? I ask that because I applied last year but I have not received any reply to date. 

Mark, Nairobi

Hello Mark. Thank you for considering KCB as your employer of choice. At KCB, we give internship opportunities every year. As you might appreciate, we receive thousands of applications at any one time but we can only absorb so much. Your application is in our database and should an opportunity arise and you meet the required criteria, a representative of the bank will contact you.

KCB customers in Eldoret are almost resigned to weekly rituals of ATM breakdowns subjecting us to lots of frustrations. This to me is a shame for a bank which keeps posting billions in profits every year. Sir, is this problem unique to us in Eldoret? Can you assure us of any improvements in the near future? 

Komen Moris, Eldoret

Hello Komen. We regret the experience. We are continually enhancing our operations to ensure a seamless service to all our customers across all markets. We are putting in key measures such as regular maintenance and regular manning of the ATMs to help in reducing these challenges. We are also encouraging our clients to engage on our digital platforms, especially so as we increasingly move into financial technology (fintech).

Why does KCB charge exorbitant ATM, over-the-counter withdrawals and standing orders fees compared to other banks yet you all operate within the same economic environment? 

Mark, Nairobi

At KCB, we have built a model that is able to give our shareholders the greatest value while providing our customers with unparalleled experience. The business model we have applied today has helped us understand our customers’ needs better. We believe that in a competitive market like ours, no bank can afford to charge “exorbitant” fees and hope to remain in business. Our fees are comparable and within the industry average.

Dear Sir, non-cash payment is indeed growing and this is what made M-Pesa dominant. How will PesaLink attract enough customers to go around the complexity of systemic failure to integrate all major financial services?

Paul Theuri, Nairobi

PesaLink is a product of Integrated Payments Services Limited (IPSL), a wholly owned company of the Kenya Bankers Association (KBA). It was established as part of the KBA’s strategy to bring Kenya’s national payments system firmly into the digital age. This project is a multi-stakeholder initiative with the support of the National Treasury, the Central Bank of Kenya, and other players in the payments ecosystem. The reality is that customers want real time transactions, 24/7/365. We at KCB are at the forefront of providing solutions to our customers that financial technology bring with it. We continue to innovate and collaborate with new products that we believe will revolutionise the way our customers interact with us.

Sir, I have been an ardent customer of KCB but I am changing my mind. Last year I had a business loan in your Bomet branch but surprisingly I paid my loan up to this year in January using an interest rate of 17 per cent yet from the CBK directive, the highest that commercial banks should have been charging was 14 per cent. I tried to ask the management the reasons behind but in vain. Explain to me sir. 

Jeff Chepkwony, Sigor, Chepalungu

Hello Jeff. Thank you for being loyal to KCB. In accordance to the law, the Banking Act as amended by the Banking (Amendment) Act 2016, our interest on loans remains at a maximum of 14 per cent. We are fully compliant on this law. We are, therefore, looking into this issue and a representative from the bank will be in touch with you directly to ascertain what might have transpired.

Several branches of your bank are still congested, for example, Kakamega and Eastleigh, among others. What efforts are you putting in place to have them decongested so that your customers can have efficient services? 

Alex Andabwa, Kakamega County

 Alex, we remain cognisant of the challenges we face in a number of our branches. Technology will come to our aid. We have seen increased migration of a good number of our customers to the digital platform, whose growth has been nothing short of phenomenal. We have created a dedicated unit within the bank – Digital Financial Services – which has a special emphasis on continuously improving customer experience. You can access these services through the KCB App or use the USSD code *522# to continue enjoying our services without having to spend time in a queue.

Sir, the time a customer takes to be served at KCB branches in Mombasa town and its environs is too long. It takes an average 45 minutes to one hour to be served especially towards school opening days. In most cases there are only two or three counters being operated by tellers instead of six or more. Are you short of employees or is this a cost-cutting measure? 

Samuel Wasonga, Mombasa

Hello Samuel. Understandably, we are aware of these challenges which some of our customers face. We have been continuously working to improve the time a customer spends receiving services in all our branches by investing in queue management technology. Additionally, we have embraced financial technology in order to deliver more services digitally and serve our customers at their conveniences from mobile devices and computers. Through this, one can access various financial services such as cash withdrawals, transfers and loan facilitation.

Sir, with the capping of interest rates, most banks have resorted to resizing/downsizing, while others have closed some branches. What is KCB doing to stay afloat in these turbulent times? KCB was recently rumoured to retrench 500 employees. Is this the true?

James Mosongo, Nairobi

Hello James. As mentioned earlier, we are offering a voluntary buyout programme for employees considering early retirement as the bank accelerates its transformation strategy. The programme is expected to align the competing needs of adapting to a banking industry whose outlook has been dimmed by legislative and regulatory reforms, and fast evolving technology platforms that are now attracting non-traditional players into the financial services sector. The buyout package offers generous severance terms comparable with industry and labour law stipulations, a notice pay out of at least three months and family access to medical insurance cover for the rest of the year.

KCB and Baringo County government have been running a partnership programme to support livestock farmers. Sir, has this programme achieved its intended objectives? What are some of the outstanding challenges? 

Komen Moris, Eldoret

Komen, KCB sees agriculture as a key driver of the economy. We have piloted a lending programme targeting this sector in Turbo and the response clearly demonstrates that this is an area that has been starved of funding. We are also working with MasterCard Foundation to build capacity in the agricultural sector to make farmers bankable and therefore allow them get easier access to credit. We intend to build a credit history for the farmer. Given the drastic changes that the banking sector has experienced driven by regulatory changes, technological innovations and change in the competitive space, banks, have been forced to rethink the role branches will on building client relationships rather than having them remain transactional. We have worked tirelessly to improve our customer experience, refreshing the brand promise, improving branch efficiency and changing the mindset of all our staff members to be customer centric.