Commercial Bank of Africa (CBA) has unveiled a new digital money management and consumer banking service which is expected to inculcate saving culture amongst its youthful clients
Dubbed ‘Loop’, the tool which is targeting millennials and tech-savvy customers has Personal Financial Management tool, which enables customers to track, plan and analyze their income against expenditure on a regular basis
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Unlike other banking Applications in the market, Loop presents a range of transactional features that streamline how customers save and invest, not just depositing, withdrawing and borrowing.
“It will also make it easy for customers to plan for and finance the personal goals and other aspirations for a given period,” said Eric Muriuki, CBA General Manager
The bank is the latest in the country to adopt a digital strategy even as most banks plan to go branchless in the next 5 years. It is also a cost cutting measure
This bank management tool by CBA is being launched into the market at the time Kenya is being ranked least in terms of household saving in the continent.
According to a recent survey by the World Bank, low level of savings in Kenya is reducing the amount of investment in the country, which holds back economic growth.
According to World Bank, savings in Kenyan households are not only low and declining, but are also lagging behind other economies in the region, which are less economically endowed
The report for instance shows that less than 30 year ago, the saving rate in Kenya was higher than in Senegal, Ghana, Uganda and Tanzania, but country has stagnated in the last three decades, allowing the rest to catch up and surpass it.
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According to the global lender, high current account deficit is not sustainable in the long term and the total external debt is projected to increase to 37 per cent of GDP in 2018, from the current 29 per cent, putting a question mark on the long-term sustainability of the savings-investment gap
Last year’s report by the Kenya Deposit Insurance Corporation (KDIC) which shows that, 9 out of 10 account holders in the country hold less than Sh100,000 in their bank accounts perhaps authenticates the World Bank’s report.
This means that most people with bank accounts in Kenya don’t use them for saving purposes but rather as a mere money channel destined for consumption.
In fact, 96 per cent of Kenya’s 31 million bank accounts hold deposits that can be withdrawn at any time
The CBA initiative is the first practical programme in the country by a bank to encourage clients to save.