Driver of Changes in Banking Industries Regulations or Government The Banking industry in Kenya is governed by the Companies Act, the

Banking Act, the Central Bank of Kenya Act and the various prudential guidelines issued by the Central Bank of Kenya (CBK). Recent introduction of agent banking by Central bank of Kenya is good examples of significant changes taking place currently in Kenya Agent banking represents a significant opportunity to reduce transaction costs such as travel - for clients by bringing financial services to hard-to-reach and geographically dispersed areas. Banks and other financial institutions often do not have sufficient incentive or capacity to establish formal branches in these areas. The set-up of agent banks is less costly and more flexible than for traditional bank branches: it reduces the need to invest in staff and physical infrastructure Liberations of banking industry The Central Bank Act Amendment of 1999 created a capital requirement so that it would parallel Balse Committee Accord (BCA) and International Supervisory practice, restricted advances, credit or guarantees in excess of twenty-percent, and forced banking institutions to give all information of shareholders in the banking institutions is one of three efforts offer liberations of banking industries Introduction of credit reference The Kenyan banking sector was in the 80s and 90s saddled with a momentous Non-Performing Loans (NPLs) portfolio. This invariably led to the collapse of some banks. One of the catalysts in this scenario was Serial defaulters, who borrowed from various banks with no intention of repaying the loans. Undoubtedly these defaulters thrived in the information asymmetry environment that prevailed due to lack of a credit information sharing mechanism. The Banking (Credit Reference Bureau) Regulations 2008, will govern licensing, operation and supervision of CRBs by the Central Bank of Kenya. The development of a sustainable information sharing industry is therefore recognized as a key component of financial sector reforms in almost all The ICT revolution and technological innovation ICT gave birth to new players in the financial field that challenged existing practices and traditional players. Mobile service provider like Safaricom involvement in mobile money has brought considerable changes in money transfer Internet banking introduced branchless banking. Indeed, significant cost advantages favoured a large shift to electronic banking and financial intermediation. The introduction of a seamless mobile bank account product by Equity Bank (MKesho) and Safaricom on opened up electronic commerce -- and mobile commerce

in particular -- to the mass market. The service, dubbed M-Kesho, will allow users to perform basic banking transactions like deposits, withdrawals, loan applications, processing and reception right from their handsets. The introduction of fully-fledged mobile banking services will help unlock virtual settlements at retail shops that for years have grappled with poor penetration of debit and credit card usage, concerns over their security, and concerns over the time gap between payment and settlement of transactions. Technology advances has also enhanced speed and simplicity of financial data processing abolished the concept of time and delays in financial transactions. It allowed financial institutions to adopt ever more sophisticated like SMS banking Globalization The implications of globalisation for the banking sector are quite clear. The national and international economic policies put in place in the recent, The rapid growth of transnational businesses; And the major technological advances in both communications and transportation The trend implies that national financial markets have increasingly become integrated with each other and shocks in any of these markets are rapidly transmitted to others. Economic integration calls more trading activities among members country. These have resulted to increased demand for foreign currency in these countries. Commercial banks facilities this trading through their services of money transfer, Letter of credit facilities and guarantees Globalization has taken banking dimensions and contents of a new, made the banks tend to the fields and activities unprecedented, and led to the transition from the attitudes and perceptions of activities and extended range, in order to maximize the opportunities and increased gains, and look to the future. In light of globalization become banks innovate and create distinct clients, and provide them with future richer and richer more at the level of banking service And the future of this innovative technology is owned and used by banks, which are only common denominator in all the work of trying to progress and to the growth and prosperity The changes reflected in the banking world of globalization on the performance of bank, is the emergence and growth of new banking entities, which are clearly a coup in the world of banks. The giant banking entities, by virtue of the enormous economic power relations and the large economic size, and high economic performance, has become a high capability to influence the form and market trends banking growing global growth and accelerating the proliferation and expanding through a presence in all parts of the world

Changes in consumer needs and behaviours Increased willingness of consumers to take risks and invest in high return ventures has called for more credit facilities. In Kenyan perspective, the business environment (though not all that conducive due to heavy cost of investment and production, partly because of heavy taxation and energy issues) has enabled a number of macro and micro enterprises to rise. More and more micro-enterprises are seeking support from the commercial banking industry and this has partly facilitated to their rapid changes in banking sector With changing governments, which come with promises of a better tomorrow and definition of new business policies, reconstruction of economy, improvement of infrastructures and security, small businesses are expected do well and individuals are expected to improve their standard of living e.g. building better residence, acquire long term assets etc, all these changes has resulted to more business people and individuals to seek credit facilities from the banks in form of Mortgages, Assets financing, Invoice discounting ,LPO financing etc Consumer Banking, Priority or Prestige Banking, Private Banking, SME Banking are some the recent products launched by various banking to suit the changing consumer needs. The need for longer banking hours has prompted some banks to extend their banking hours up to 9 pm. Growing importance of non-bank financial intermediaries Emergence of insurance investment companies, Sacco and Micro finance institutions and started playing some of the roles being played by commercial banks is another factor driving changes in banking sector Overall, Microfinance institutions (MFIs) are important actors in the financial sector, and they are well positioned to grow and reach the millions of potential clients who currently do not have access to mainstream financial services. Some of them have grown to the level of same roles commercial banks play. For instance emergence of Family bank and Kenya Women Finance Bank is enough evidence of how this microfinance are changing banking industry The role of Savings and Credit Cooperatives (SACCOs) in providing access to financial services to low income households in Kenya cannot also be ignored. SACCOs are one of the leading sources of rural finance and in many rural areas the local SACCOs operating in Kenya is not known, estimates range from almost 4,000 to 5,000. About 200 of these are considered deposit-taking SACCOs, offering front office savings activities (FOSA). Again Saccos are one of the drivers of change in the baking industries