Banks in the country will soon be offering their clients an array of services on top of the basic financial services. Adoption of proposed amendments in the Banking Act by Finance minister Njeru Githae will allow banks to legally conduct the varied services .
“The trend globally is towards convergence of financial services where banking, insurance and stock brokerage are being offered under one roof. In order to facilitate a “one-stop-shop” financial services solution, I propose to amend the Banking Act to expand the scope of banking business to include incidental financial services that can be offered by banks subject to review and approval by the Central Bank to ensure adequate risk mitigation.” Githae read in the Budget statement 2012/13.
According to Prudential Guidelines issued by the Central Bank of Kenya in May, banks are limited or restricted on what kind of business engagement they can commit to outside their core businesses. The guidelines state that “it would be imprudent for an institution that has been licensed to carry on banking, financial or mortgage finance business to venture into trading, or investments that may be risky thereby jeopardizing depositors’ funds.”
Should these amendments be implemented, bank customers could get cheaper insurance and stock brokerage services as banks try to give their clients value added services to beat competition.