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Monday, October 3, 2022

Faulu Bank: What Is The Future Of Its Employees?

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Faulu Bank employees are concerned after four branches in Nakuru, Taita Taveta, Meru, and Kirinyaga were closed to cut down running expenses.

The Central Bank of Kenya (CBK) has approved Faulu’s application to merge some of its branches and marketing offices, according to the company.

The trimming of branch count is expected to significantly reduce rent expenditure as customers are pushed to digital platforms such as mobile banking.

The Taveta and Njoro offices will close on July 31st, while the Mwea and Maua branches will close on October 31st.

The four branches’ closures might result in job losses, as has been the case with other financial service institutions that have followed this path.

Bank Staff Layoffs

The NCBA Group closed 14 of its Kenyan branches in July last year due to a drop in business caused by Covid-19, and later announced job cuts in November.

After the merger of NIC and CBA banks in 2019, the lender expanded to become Kenya’s third-largest bank by assets.

KCB Group, Kenya’s largest bank by assets, bought the capital-strapped National Bank of Kenya in 2019 and laid off 112 employees.

StanChart and Absa are two other lenders that have laid off employees as a result of mergers or acquisitions.

The Njoro marketing office will be merged with the Nakuru branch, and the Taita Taveta marketing office will be merged with the Voi branch as part of the Faulu restructuring.

The Faulu Mwea branch will be combined with the Embu branch, and the Maua outlet will be combined with the Meru branch.

The CBK announced in December that Kenyan lending institutions lost Sh1 billion in the year to June, during which time financial institutions were forced to set aside higher provisions for defaulted loans and restructured over Sh1.12 trillion in debt.

Decrease In Overall Physical Bank

The decline in physical bank branches was primarily due to the use of alternative distribution platforms such as cell phone banking, internet banking, and agency banking.

The emergence of mobile banking has enabled lenders to communicate directly with customers, reducing the need for physical locations, but it has also resulted in significant job losses among clerical workers.

Banks have cut 6574 clerical jobs in the last five years, down from a high of 18,539 in 2014, as the shift to digital banking via mobile phones enabled lenders to use technology to automate routine tasks, reduce costs, and improve performance.

Basic services such as account opening, over-the-counter services, and sales are migrating to digital channels that provide not only money transfer, but also credit and investment, payments for goods and services, and e-commerce via partnerships with various financial and non-financial institutions.

From Sh367.77 billion in 2018 to Sh382.93 billion in 2019, the volume of cell phone-based transactions increased by 4%.

Faulu Bank Previous Expansions

In 2019, Faulu opened eight new branches throughout the country at a cost of Ksh.113 million.

In a development seen as a restructuring of the bank’s physical presence, the micro-lender also refurbished 15 of its 60 branches.

The move went against recent bank trends of trimming their physical locations to save money.

Faulu’s focus on physical presence, on the other hand, was demonstrated by its latest agency banking pilot and subsequent roll-out in April.

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