A caller rushes through his words but then pauses to gauge their effect on the unknown person on the other end. Like a snake charmer, he relies on sound to bamboozle the potential victim.
The idea is to keep the receiver on the line long enough to buy his story, give him confidence by mentioning he is sitting at the bank head office, then trick him into providing the mobile banking password and other details before an account is cleaned in seconds.
They are called “Kamiti boys”. Brushed aside as some jailbirds dialling random numbers in the rising trend of mobile banking fraud, they are a growing army of fraudsters taking advantage of Kenya’s meteoric adoption of digital banking.
And it has been meteoric. Besides athletics and coffee, Kenya’s most touted international credential is the adoption of M-Pesa -- the trailblazing mobile money service by Safaricom that is mentioned in all tech conferences globally and even central bankers.
“Overall, there has been a significant growth in digital account ownership, uptake and usage over the last three years. FinAccess 2019 shows that 87 percent of households in Kenya have access to a digital account and 78 percent are active account owners,” reads a study by Francis Gwer, Paul Gubbins, Edoardo Totolo and Jack Odero of Financial Sector Deepening (FSD).
Behind these impressive numbers is a deliberate push by banks to make going to the branch so expensive that the only option will be to use your mobile phone.
A branch customer will pay an average of Sh14,970 in annual transaction costs while the digital client will incur an average of Sh5,620 being just a third of the costs.
However, in its wake, it may be exposing customers to fraudsters, and punishing older people and vulnerable customers for using bank branches.
“Banks have shifted to technology to reduce their costs. One way to force you to get out of brick and mortar is to raise the charges of face-to-face services. Going by our culture, we love face-to-face interaction, hence we must be forced,” said Prof XN Iraki, an economist at the University of Nairobi.
Banks spent billions of shillings buying technology platforms and building lending applications as the race to become digital heated up.
To adjust to these investments, they fired workers as a cost-cutting measure, especially post-2016 when the rate cap was introduced capping how much money could be made on loan interests.
Money could only be made through fees and commissions and mobile offered a lucrative route to draw customers while avoiding the watchful eye of the regulator.
“Third party costs, especially those associated with digital transactions, were not disclosed as required by the prudential guidelines. Notably, one bank charged Sh18 for SMS receipts for RTGS transactions that were debited from the account,” FSD said.
But, as the good professor said, Kenyans are creatures of habit and would not walk willingly with the bankers to their slaughter.
A survey commissioned by bankers lobby group Kenya Bankers Association during the last quarter of 2018 showed that 80 percent of customers still value the traditional model of customer service despite the rising uptake of technology by lenders to enhance service delivery.
Research firm Infotrak also carried out a survey, which showed that two in every five banked Kenyans prefer using physical branch outlets and 66 percent, regardless of the age, are likely to opt for them in future -- an indicator that outlets are not going anywhere soon.
FinAccess 2019 showed that a large proportion of bank customers (61 percent) use branches for transactions. At the same time 73 percent of non-users of mobile money cited preferences as their main barrier for uptake.
The customers had spoken, they would still walk into bank branches inasmuch as they were more likely to get two tellers at counters that were built for 20.
In 1996, Kenya’s one million bank customers were being served by 16,673 bank tellers but, by last year, 31,889 had to divide their attention between 55.2 million clients.
Banks that had fired 5,034 of their employees since 2014 were now faced with overwhelming dissatisfied customers at the branches.
They resorted to pushing balance scorecards on their staffers which, in turn, only led to fightback by unions, which mobilised their collective bargaining agreements to fight the pressure.
Then lenders discovered an easier way to shove customers out of the banking halls. Rather than deny them toilets or make them wait for ages in snaking queues, why not just tax them like cigarette smokers.
According to the FSD study, banks were charging up to Sh1,056 for over-the-counter (OTC) withdrawals while RTGS transfers done at the branch were the most expensive and significantly higher than those done over the mobile banking app and through internet banking.
In 2018, when the government doubled excise duty on fees charged by banks from 10 percent to 20 percent, financiers used this excuse to drive up the cost of withdrawing cash over the counter by up to 50 percent.
“Expectedly, a bank that has invested in establishing a digital infrastructure will encourage its use,” FSD said.
“During the mystery shopper phase, some banks indicated that they have high charges for OTC withdrawals to discourage their customers from going to the branch and instead use the ATM and other digital channels. However, the data shows that these banks still charge relatively higher for withdrawals done over digital channels,” the report read.
And the trick worked: FSD noted that usage of traditional bank accounts has dropped from 32 percent in 2016 to 30 percent in 2019. Cost is often the most visible constraint to access and usage, but it is not the only one.
Banks are reporting impressive numbers, for instance, in 2018, 93 percent of loans disbursed by Equity Bank and 97 percent of cash-based transactions were through digital channels.
Kenya Commercial Bank (KCB) reported a steady increase in non-branch transactions from 64 percent in 2016 to 88 percent in 2018.
In 2018, the bank’s transactions over mobile channels accounted for 62.1 percent of the total value of transactions compared to 16.2 percent at the branch, with the two recording a 20 percent increase and a 13 percent decline from 2017 levels respectively.
The bankers extolled the virtues of digital banking as cost saving, noting that a customer would save an average of Sh9,350 in annual transaction costs by choosing to transact digitally instead of going to the branch.
But this was just half the truth, a digital borrower tends to make more transactions than those who go to the branch. They also tend to be more erratic and would withdraw money for consumption and entertainment with no limits of branch opening hours.
It is through these repetitive transactions that banks hope to glean an extra shilling.
“Digital is cheaper, but not always: even as banks push their customers away from the branches, the costs of some digital transactions remain higher than at the branch. Transactions such as account balance enquiries are free at the branch but charged by some banks when the enquiry is over a mobile banking app. Additionally, there are several other charges associated with digital transactions that stack up the costs, such as charging for SMS receipts, access fee for internet banking, etc,” FSD said.
The move to digital has not been a complete success, with a significant number still preferring to walk into a bank and greeting a smiling teller and relishing the touch of a solid stamped receipt.
Then there are those that have a challenge using mobile phones to transact who have often fallen into the trap of the growing army of fraudsters and vowed they will only bank with a human they can see.
This is the section of the market that is being punished for no fault of their own. They, FSD fears, will be left out of the great digital migration.
“Even as digital transactions offer significant cost-savings, the channel preferences for bank customers and the drivers of those preferences need to be considered. Pricing branch transactions significantly higher to discourage usage might potentially lead to a segment of the market excluded from banking. Already, affordability is the main reason cited for failure to use banking services,” FSD said.