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Shift to paperless banking saved COOP close to Sh600 million in FY2015.
Co-operative Bank of Kenya Ltd (NSE:COOP) is in the process of eliminating traditional paper transaction in its banking system and the lender is already reaping the benefits. In FY2015, the bank trimmed its paper costs by more than 50% and the management believes there is more room to reduce printing expenses in the future as the Kenyan lenders look to cost-cutting to improve earnings.
According to Co-operative Bank of Kenya Ltd (NSE:COOP)’s CEO, Gideon Muriuki, automation of more than 60 previously manual processes and phasing out paper deposit slips in the banking halls paved the way for the massive saving on printing costs last year. The bank spent only Sh6600 in printing costs in 2015, indicating a steep decline from Sh1.2 billion spent on the same in the prior year.
With the bank encouraging more of its customers to embrace mobile and digital banking services, Co-operative Bank of Kenya Ltd (NSE:COOP) hopes to make more savings on printing costs in the coming years. The growing popularity of agency banking is also helping the bank to trim its stationery costs.
One of the largest costs for banks
But Co-operative Bank of Kenya Ltd (NSE:COOP) is not alone in the shift away from legacy paper transactions in the banking hall. Equity Group Holdings Ltd (NSE:EQTY) is another lender reaping the benefits of rolling out mobile and digital banking services while phasing out paper processes.
But why are banks so much concerned about phasing out paper transactions in their systems? According to Equity’s CEO, James Mwangi, printing cost is one of the largest expenses banks in Kenya face. As such, if the banks can find more ways to shift their manual processes to digital platforms, their profits can improve and investors can smile all the way to the bank.
But Co-operative Bank of Kenya Ltd (NSE:COOP) is not alone in the shift away from legacy paper transactions in the banking hall. Equity Group Holdings Ltd (NSE:EQTY) is another lender reaping the benefits of rolling out mobile and digital banking services while phasing out paper processes.
But why are banks so much concerned about phasing out paper transactions in their systems? According to Equity’s CEO, James Mwangi, printing cost is one of the largest expenses banks in Kenya face. As such, if the banks can find more ways to shift their manual processes to digital platforms, their profits can improve and investors can smile all the way to the bank.
Banks post profits
Co-operative Bank of Kenya Ltd (NSE:COOP) posted a profit of Sh3.44 billion, an increase of nearly 8% over the same period a year ago. The management attributed the jump in profit to the ongoing operational efficiency drive, which includes reduction in paper usage in the bank.
Co-operative Bank of Kenya Ltd (NSE:COOP)’s shares pulled back 0.55% to end the day at Sh18.05 on Monday, May 30, 2016 .
Co-operative Bank of Kenya Ltd (NSE:COOP) posted a profit of Sh3.44 billion, an increase of nearly 8% over the same period a year ago. The management attributed the jump in profit to the ongoing operational efficiency drive, which includes reduction in paper usage in the bank.
Co-operative Bank of Kenya Ltd (NSE:COOP)’s shares pulled back 0.55% to end the day at Sh18.05 on Monday, May 30, 2016 .
Equity’s 1Q profit jump 20% YoY
Equity Group Holdings Ltd (NSE:EQTY) also posted a 20% increase in 1Q2016 to Sh5.1 billion, largely driven by higher interest income but also supported by efficiency drive such as headcount reduction. The bank said the number of its employees declined by 660 in FY2015, which resulted in a 4% drop in payroll expense. The management is anticipating a further 4% drop payroll costs in FY2016.
Shares of Equity Group Holdings Ltd (NSE:EQTY) fell 1.25% to close at Sh39.50 on Monday, May 30, 2016.
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