By Benjamin Obegi
Kenyan banks are still operating in a secretive pricing regime which continues to burden customers with high account operating charges, a financial survey has shown.
According to the survey, commercial banks are operating under a cloak of secrecy despite the requirement by the regulator, the Central Bank of Kenya (CBK) making it mandatory that banks publish tariff guides disclosing their charges and fees.
The survey by Financial Sector Deepening (FSD) titled The Price of being banked, conducted in two years from 2015 to 2016, opens the lid of the charges that bank customers have to bear in opening, operating and closing of accounts as well services like cash transfers.
The survey documents that bank account opening charges vary from sh155 to sh5,660 which averages at sh1,322.
Account operating costs vary from sh3,629 to sh13,460 annually.
The survey which sought to ascertain transparency, determine affordability indicators and call for recommendations aimed at fostering affordability, also points out that bank customers don`t understand the pricing regime and even bank agents don`t help the situation either when asked for help.
The survey reads,“ Many branches displayed outdated tariff guides and have pricing structures that even the frontline bank staff are not familiar with,’’.
The difficulty in obtaining pricing information during the two-year survey, according to FSD, is an indication of the transparency challenge in the banking sector.
The study comes at a time when the government is pursuing policy and legislative platforms aimed at enhancing financial inclusion in the banking sector.
Past studies have indicated that bank charges, which are in most cases hidden, continue to prohibit new customers from opening and operating bank accounts.
Further, the studies point out that the disparities in prices in the sector have hit most thousands of youth and women who wish to establish enterprises and grow them through access to credit facilities from commercial banks.
This is despite the government opening business opportunities to the groups.
This prohibitive pricing regime, according Henry Mbatia, a Nairobi-based start-up advisor, is a hindrance to the financially disadvantaged groups who are still unbanked.
“ The uncertain and under-the table pricing takes a hit on new start-ups which in most cases operate on a small financial pool. There is need to ensure that the regulator cracks the whip hard so that the banks truly place their pricing tariffs at the hands of the customers. This will help demystify the current opaqueness’’, he told Dhahabu Kenya in a phone interview.
He further argues that because of the opaqueness, Kenyans are now turning to mobile phones to access finance since they operate on relatively transparent pricing environments.
The survey recommends for increased pricing openness in the banking sector. It says, “Unless it is addressed, it is unlikely that the government policy objectives and consumer protection will be met’’.
Since assuming office, the current CBK boss Patrick Njuguna, has been at the forefront in pursuing policies aimed at making the sector open and consumer-friendly.
The main highlight of the strategy resulted in the capping of the bank interests through parliamentary legislation.
