Answer:
Explanation:
Despite the consolidation of the sector, authorities will not refrain from issuing new licences. Instead, they are expected to continue granting new banking licences in the future. That said, we can also expect more mergers and acquisitions in the sector as experts predict the consolidation will continue in the coming years.
According to the Central Bank of Kenya, banks that will embrace innovation and adopt new technologies will have unprecedented opportunities to change and improve how they provide financial services and products. At the same time, they must manage the risks created by the new digital economy,
The Kenya Bankers Association’s State of the Banking Industry report 2019 revealed that financial technology is increasingly changing the shape of the banking industry in the sense that competition in the provision of financial services is well beyond the formal regulated institutions.
It further states that new entrants with digital prowess will gain prominence, while many incumbent lenders will be forced to alter their strategies to compete. There will be greater industry fragmentation and blurring of industry boundaries, with financial services increasingly offered by an emerging breed of nonbanks.
Richard Njoroge told International Finance, “Consolidation can be regulator driven, such as through requirements for higher capital levels as was the case in Nigeria, or market-driven. Attempts by the regulator in the past to increase the level of minimum capital have not gone far as these proposals have been blocked in Parliament. In my view consolidation will be driven by business imperatives, which make it difficult for banks below a certain scale to be competitive. Consolidation has taken a while, but we are already seeing this starting to happen. I expect that we will have fewer banks in 10 years’ time.”
