Why thousands of ATM machines have been shut down in Kenya

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Equity Bank, Kenya’s biggest bank by customer numbers, acknowledged that ATMs have no future in their new business mode.

Barclays and Equity bank have lost an estimated Ksh25 million from their automated teller machines to robbers just this year.

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On January 29, 2019, the DCI received a call from the bank’s security manager, Thumbi Ireri, informing him that the lender had lost Ksh.14 million over the weekend.

He added that the money was allegedly lost at the ATM between January 26 and January 27, 2019, under the custodian of George Ng’ang’a and Samuel Wanjohi as well as the supervision of operation manager David Warui.

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Just recently, Barclay’s bank lost an estimated Ksh 25m when four of its teller machines were tampered with and money was withdrawn.

Kenyans transact on mobile money close to Ksh 300 billion a month, the figure has risen over the years.

The huge volumes have made banks to have no choice but link their systems with those of telecoms, which offer mobile money services.

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With the increased usage of mobile money, a number of banks in the country are quietly pulling the machines down and asking customers to use mobile phones and agents as they seek to cut costs.

The result is that an increasing number of Kenyans have embraced mobile banking thus staying away from the ATM machines located at shopping malls and market centres.

Further, the introduction of a law to cap interest rates eating into banks’ profit margins has made it almost an urgency for the financial institutions to cut costs.

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Besides laying off staff, closing branches and reducing the number of ATM machines, Kenyan banks have embraced agency banking, including by placing agents within their premises.

The strategy to use agents has not only helped banks to cut costs by employing fewer tellers, but they have also aided in decongesting their banking halls. There are more than 40,000 bank agents across the country, according to the Central Bank of Kenya.

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They carry out basic banking services such as transacting deposits and withdrawals, payment of bills, fund transfers, account and loan application form issuance.

With the rise of agents and mobile banking use, ATMs have little chance of survival in the East African nation, banks have realized.

Latest data from the Central Bank of Kenya indicated that there are about 2,000 ATMs across the country, down from a peak of 3,000.

The machines have been on fast decline in the last two years, but dropped drastically towards the end of last year and this year.

Central Bank attributed the trend to increased use of mobile technology by banks and their customers.

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