Survey Key Findings Presentation Flow Key Findings Summary - - PowerPoint PPT Presentation

2019 FinAccess Household Survey Key Findings

Key Findings Summary Questions & Answers

Presentation Flow

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Key findings

Access Usage Quality Impact

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Expanding Access

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Financial Access Journey: 2006 - 2019

26.7 40.4 66.7 75.3 82.9 41.3 32.7 25.4 17.4 11 32.1 26.8 7.8 7.2 6.1 2006 2009 2013 2016 2019

Access Level (%)

Formal Excluded Informal

Access to formal financial services and products has expanded significantly among Kenyans…

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More Kenyans now access formal financial services and products…

15 21.6 32.7 42.2 43.9

4 14.7 33.2 32.7 38.6 7.7 4.1 0.8 0.4 0.4

32.1 26.8 7.8 7.2 6.1

41.3 32.7 25.4 17.4 11

% % % % 2006 2009 2013 2016 2019

Formal Prudential Formal Non-prudential Formal Registered Informal Excluded

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Access gaps still exist, but narrowing…

12 14 8 9 6 12 27 20 17 14

48 55 61 54 32

20 40 60 80 100 2006 2009 2013 2016 2019

Access Rates Gaps (%)

Sex Residence Wealth Quintile

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Financial inclusion gaps narrowing, but…

2016

Formal inclusion Exclusion rate

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Mobile money is the story behind expanding financial inclusion…

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Kenya’s financial inclusion ranks higher across the continent…

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48.7 49 58 65 68 73 82.9 90 95 14.6 15 20 7 21 5 6.1 3 2 36.8 36 22 28 11 22 11 7 3

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nigeria-2018 Cameroon-2017 Uganda-2018 Tanzania-2017 Rwanda-2016 Namibia-2017 Kenya-2019 South Africa-2018 Seychelles-2016 Formal Informal Excluded

Deepening Usage

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More Kenyans use a wide menu of financial services and products…

14 13.1 1.7 4.9 3.2 0.0 32.4 20.5 9 3.4 3.3 3.7 27.9 36 29.2 11 3.5 17.8 1.9 61.6 27.7 38.4 12.9 3.6 23.2 12.5 71.4 41.4 0.6 40.8 11.3 1.7 27.9 12.2 79.4 30.1 8.3 BANK SACCOS MFIS INSURANCE (INCL.NHIF) PENSION MOBILE

MONEY

INFORMAL

GROUP

DIGITAL LOANS APPS

2006 2009 2013 2016 2019

Mobile banking: 2016 = 17.5% 2019 = 25.3%*

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Digitalization raising transactions frequency…

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

Daily Weekly Monthly

• nce in 3

months and above Daily Weekly Monthly every 3 months and above 2016 2019

Frequency of use (%)

Axis Title

Bank account SACCOs Mobile bank account Mobile money MFI Informal Groups

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More is preferred to less…

39.8 36.1 26.9 22.6 15.3

18.8 31.2 47.8 60 73.7

41.3 32.7 25.4 17.4 11 2006 2009 2013 2016 2019

One type of financial service Two or more types of financial services none (excluded)

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More adults use a mix of formal and informal services and products to meet their growing and complex needs…

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Young people driving mobile banking. What is the future of traditional banking?…

22.7 23.2 22.8 24

37.9 22.7 33.3 39.1 36.3 17.5 34.1 19.7 36.4 11.4 33.7 10.2 25.5 3.7 24.9 6.3

31.7 17.5 29.6 25.3 Traditional banks Mobile bank account Traditional banks Mobile bank account 2016 2019

18-25yrs 26-35yrs 36-45yrs 46-55yrs >55yrs Overall

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Mobile banking usage dominates traditional banking…

39.4 21.7 36.9 30.2

24.5 13.5 22.6 20.6 21.8 10.5 19.7 16.2 48.8 29.5 44 38.4 31.7 17.5 29.6 25.3

Traditional banks Mobile bank account Traditional banks Mobile bank account 2016 2019

Male Female Rural Urban Overall

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Challenges and reasons for non-use of bank account vary…

36.4 30.9 13.2

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0

ATM or Card Swipe machine not working Unexpected charges Poor service received at a branch/agent/customer care

35.1 19.3 15.5

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0

No money to Save Can't Afford to No regular Income

Top challenges cited in bank account usage (%) Top reasons for non-use of a bank account

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Use of Informal Groups still strong – but challenges abound...

Top challenges in informal Groups Usage (%) Informal Groups Usage by number

Challenges

2016 2019 Chang e

Dishonesty or default by members

12.0 48.7 36.7

Theft or fraud by a committee member

6.2 25.6 19.4

Theft or fraud by a non- group member

3.7 7.4 3.8

Bad investment of funds

2.9 5.1 2.2 3%

8%

19%

70%

Use 1 group Used more than 3 groups

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Savings moderated but Credit uptake picked up from 2013...mainly digital

Top Reasons for not saving (%) Savings and Credit Uptake (%)

Use 1 group

35.5 37.8 28.6 34.2 50.4

52 51.5 58.4 66.4 69.9

20.0 30.0 40.0 50.0 60.0 70.0 80.0

2006 2009 2013 2016 2019 Credit/Loans Savings

2.3 2.4 5.1 8.7 19.0 38.3 42.3

Do not want to keep a minimum balance I don’t need to save I only save when I need to There’s nowhere to save my money I use my money for investments not for savings I don't have enough money to save Requires a regular income

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Cost/affordability and preference influence product/service use...

Key Reasons for non-use of a financial provider/product (%)

Use 1 group

Banks Sacco Mobile Money Mobile banking

Financial situation/ affordability 76.7 9.9 0.5 1.1 Service charges 1.3 1.2 37.7 13.7 Convenience/Service quality 2.0 6.3 1.0 0.7 Risk of use 1.2 1.6 2.2 Preference 11.5 27.5 21.4 64.3 Eligibility & Identification requirements 3.2 2.8 16.4 5.3 Literacy 2.1 3.4 0.6 3.1 Trust 0.7 15.1 Account/ device 18.3 5.7 N/A 0 - 20%

21 - 49% 50% and above

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Use of insurance, pension and investments products vary overtime...

Use of Insurance, pension and investments providers (%)

Use 1 group

11.6 10.3 3.2

3.2 3.7 10.9 12.5 12.2

4.9 5.8 6.1 6 5.5 4.2 15.6 21.2 26.1 2.7 2.9 9.6 11.7 11.4

4 8 12 16 20 24 28

2006 2009 2013 2016 2019 Investments Pension (excl.) Insurance (regulated by IRA) NHIF NSSF

• Reasons vary for these trends

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Use of insurance mainly influenced by ability to pay policy premiums...

Top Reasons for lack of Insurance policy (%)

Use 1 group

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Mobile money device increasingly driving insurance policy premiums payment channels...

Channels for Paying Insurance policy premiums (%)

Use 1 group

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Lack of investible funds and little knowledge are inhibitors to investment in securities...

Top Reasons for not investing in securities (%)

Use 1 group

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Despite rapid digitalization, Cash still remains the most dominant mode of making payments...

Cash dominates all other transaction devices (%)

Use 1 group

• Cash used

widely for daily expenses, monthly bills payments, fee payments, remittances, and purchase of assets

0.0 8.0 16.0 24.0 32.0 40.0 48.0 56.0 64.0 72.0 80.0 88.0 96.0 Bank Transfer Mobile money account cash Pay bill/Till No.

pay monthly bills Pay school fees Paid Government Paid Pension Paid Daily Expenses Sent/Gave money inside Kenya Sent money outside Kenya Received money from inside Kenya Received money from outside Kenya Paid for Assets

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Mobile money usage quite widespread amid emerging challenges...

Purpose of having mobile money

Use 1 group

Challenges in using mobile money

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Relevance: Goals, Needs and Financial Solutions

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Major priority goal among Kenyans is education and putting food on the table…

Major priority goal by sex and residence (%)

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More Kenyans are faced with financial needs towards investment goals, managing shocks and meeting day-to-day expenses...

• Consumers choose

financial services and products based on their needs, which are reflected in their use

• f available solutions

either formal and/or informal

Proportion of adults mentioning a financial need (%)

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Kenyans’ socio-economic status and livelihood resilience largely influenced by how they meet their needs…

Needs by wealth quintiles (%) Needs by livelihood sources (%)

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Financial solutions vary with the need…

Financial solutions used towards meeting financial needs

NOTES

Social networks = Borrow from friends and family Personal = Sell assets/livestock/poultry, get additional work, cut back on expenses Formal = Use savings or borrow from formal institutions such as banks/MFIs/ SACCOs, excluding insurance Informal = Borrow or savings from informal providers such as shylocks, Chama, employers,shopkeeper,secret hiding place

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Effectiveness on the use of selected solutions (%)

Both financial and non-financial solutions are used widely in addressing a financial need…

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Financial Health and Livelihoods

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Financial health worsened in 2019 ….

38.2 27.5 34.3 23.8 24.9 51 Improved Remained the same Worsened 2016 2019

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10 20 30 40 50 60 70 Ability to Manage day-to-day Ability to cope with shocks Ability to invest in livelihood and future Financially Healthy Adults

2016 2019

Financial Status (%) Financial Health Dimensions (%) Overall

Being in formal employment and or running business impacts financial health…

Financial health by livelihood in 2019 (%

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Perceptions on Consumer Protection and Financial Literacy

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Sources of financial advice (%)

• respondents relying on

their own knowledge was 39.6% compared to 34.7% who relied on family and friends for financial advice…huge opportunity for financial advisors!

Financial advice gaps exist…

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Sources of financial advice by Residence (%) Sources of financial advice by Education (%)

Formal education greatly impacts choice of financial advice …

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Perception on Betting/Gambling (%) Perception on Betting/Gambling as a good Source

• f Income (%)

About 70% of Kenyans perceive betting not to be a good source of income, but 20% have a positive view …

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Easing Consumer Protection Concerns….

Consumers loss of money by institutions: 2016 - 2019 (%)

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Consumer Protection Concerns….

Loss via Mobile money: 2016 - 2019 (%)

Challenges experienced on financial services used (%)

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Summary and Conclusions

• Digital transformation via mobile banking and digital apps space raises

cyber security, credit risk and consumer protection concerns.

• Cash is a still the dominant mode of payment for agriculture and

business

• Majority of Kenyans feel that their financial status has worsened, implying

reduced ability to use financial services and products to manage their daily needs, cope with shocks and achieve future goals.

• Promotion of financial literacy is important in addressing emerging

consumer protection concerns.

• Fraud accounted for the highest incidences of loss of money on mobile

money platforms, thus becoming a source of new emerging risks.

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Questions & Answers

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