How the COVID-19 Era Accelerated Digital Banking Adoption in Kenya
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Kenya, long a pioneer in mobile money, experienced a major shift in its digital banking landscape during the COVID-19 era. Before the pandemic, mobile money already served more than 80% of adults in the country.
When lockdowns and social distancing measures were introduced in March 2020, cash was increasingly viewed as a virus vector, and physical banking became less practical. These changes drove a mass shift toward contactless and remote financial services, reshaping how Kenyans accessed and managed their money.
Before COVID-19, mobile and internet banking channels in Kenya were growing at a steady pace. However, the pandemic acted as a catalyst.
The initial months brought disruptions, including a 6.98% decline in mobile transaction values between December 2019 and May 2020, and a 15.51% drop between March and April 2020 as businesses slowed down.
Regulatory measures from Central Bank of Kenya helped reverse this trend quickly. Daily transaction limits were doubled to KSh 300,000, fees for transfers below KSh 1,000 were waived, and digital onboarding procedures were relaxed to make it easier for customers to access services remotely.
By the fourth quarter of 2020, mobile banking transactions in Kenya had surged by 54% compared to the first quarter, showing a 20% year-over-year increase. Mobile accounts grew by 14.6%, while agent networks expanded by 19.6%, increasing transaction values per account by 22% and per agent by 69%.
Commercial banks also responded with speed. A CBK survey showed that 56% of financial institutions made the uptake of mobile and internet banking their core focus during the crisis.
At the same time, traditional payment cards declined sharply, where credit card transactions fell by 19.2% year-over-year, debit cards by 7%, and prepaid cards by 41%, as consumers shifted away from physical payment methods. The sector saw a wave of innovations aimed at maintaining service continuity and meeting new consumer behaviors.
Absa Bank Kenya introduced “Abby,” a chatbot on WhatsApp that enabled customers to transfer funds, pay bills, and check balances without visiting a branch. Timiza offered collateral-free mobile loans within minutes through USSD, making it easier for people to access credit during the lockdown.
Banks also rolled out contactless payment cards and enhanced their branchless banking platforms, maintaining a 99.8% uptime to ensure uninterrupted services at a time when reliability was crucial.
The pandemic also shifted how people used digital channels. Bill payments through mobile money increased significantly, with 17% to 22% of users starting to make these payments for the first time during the crisis.
Peer-to-peer transfers saw some decline, with 34% reporting fewer incoming transfers, but the value of mobile transactions grew overall. Globally, mobile money transactions grew at a slower quarterly rate of 5% during the pandemic, but Kenya’s average transaction value rose by 2.2%, indicating a shift to higher-value digital interactions.
In contrast, interbank transfers fell sharply in early 2020, RTGS transaction values dropped by 22% and ACH debits by 11%, as fintech channels became the preferred method of moving money. The dominance of mobile and internet banking during this time highlighted how quickly consumer habits could shift under pressure.
The momentum did not end when restrictions eased. Post-pandemic, digital banking continued to expand, supported by rising customer adoption and increased transaction volumes. The shift also contributed to economic recovery, with Kenya’s GDP growth moving from 1.6% in 2020 to a projected 5% in the years that followed.
By 2022, financial institutions were reporting improved resilience, strengthened by the use of data analytics and personalized digital products that catered to changing customer needs.
A report by African Economic Research Consortium projected that Africa’s digital payments economy could reach $1.5 trillion by 2030, identifying Kenya as a key driver of this growth.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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