banks

Agency banking and mobile-based banking are among the novelties in Kenya’s banking industry. And it seems the opportunities are unlimited as Kenya’s banks have now turned to insurance.

banks hall
banks hall

The institutions are offering products that include salary accounts, which come with insurance cover to lure customers as competition tightens. While some are doing this independently, others have teamed up with insurance companies.
Top on the list of lenders offering products tagged with insurance is Kenya Commercial Bank, Barclays Bank, Cooperative Bank, Equity Bank, Commercial Bank of Africa and Ecobank.
Of the bank’s products, one that stands out is a salary account that comes with retrenchment cover. Many Kenyans work in fear of retrenchment carried out by various companies regularly.
While some of the employees are informed beforehand, others are retrenched without any prior notice, a move that destabilizes lives. Banks are riding on the fear to make their customers channel their salaries through them.
“The product cushions Kenyans against any adversity that may befall them should they lose their jobs,” said Barclays Bank of Kenya consumer director Zahid Mustafa.
To qualify for the insurance cover, most of the banks ask their customers to channel their salaries through them at least for three months. And in case one loses their jobs, they earn monthly stipends from 30 days to three months, depending on the cover, as they plan their lives.
But the retrenchment policy is not the only cover; another bank is offering a death benefit of up to 1,031 U.S. dollars should the account holder dies.
“We want to expand our businesses as well as penetrate the insurance market using innovative distribution channels to grow life and non-life business,” said Ecoban’s insurance agency executive officer Ehouman Kassi.
The lenders, however, are also offering standalone insurance products that include motor, health, agriculture and life cover.
Kenya Bankers Association executive officer Habil Olaka noted that the lenders’ products would help push insurance uptake among Kenyans, which stands at 7 percent.
“The offering of the covers by banks is not new as it has happened in developed countries, and some in Africa, helping to grow insurance,” said Olaka.
Analysts observed that by offering the products, banks are seeking to ride on the millions of customers they have, who trust them with their money, to drive uptake of insurance.
“Unlike independent insurance companies, banks already have a strong bond with the people they are targeting. They have trusted them with their money, thus they can trust them with their insurance policies. This is different from the case of standalone insurance companies,” said economics lecturer Henry Wandera.
He noted that uptake of insurance products in Kenya remains low due to mistrust between companies and their potential clients. “Kenyan banks are taking advantage of this to take insurance cover to the people as they heighten competition in the industry.”
Through the insurance products, according to Wandera, the bottom line is that the banks are raising deposits from customers, which they use to lend out for profit.
According to Central Bank of Kenya, banking sector deposits grew from 24 billion dollars in December 2014 to 25 billion dollars in the quarter ending March. Enditem

-Xinhua

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