Study shows banks must drive down cost of banking if they are to add value to Kenyans

August 31st, 2017

Although this question seems simple and straightforward, answering it is more difficult than it looks. On the one hand, there are obvious methodological challenges: the annual cost of running a bank account depends on the type of account (e.g. pay-as-you-go or flat-fee accounts, premium or bundled accounts, etc.); on the frequency of usage (daily, weekly, monthly, or irregular usage); and on the types of services that a customer needs. Obviously, customers who make multiple international money transfers every day pay more than customers making basic deposit and withdrawals transactions on a monthly basis.

However, the question is even more difficult to answer because pricing information in Kenya is still opaque. Try going to a bank branch to inquire about different transaction charges for different accounts (e.g. transferring money through mobile banking apps, or getting your salary from a different originating bank) and you are likely to find that getting accurate information is more difficult and time-consuming than it should be. This is problematic if you are on a tight budget and want to find an account that adds real value for your budget and your needs.

FSD Kenya’s latest report, The price of being banked, takes an in-depth look into the transparency and affordability of banking services in Kenya. A team of researchers posing as low-income bank customers visited over 30 branches in 2015 and 2016 and followed the typical customer journey: they introduced themselves as low-income customers and asked for advice on which account to open. The findings were extremely revealing – the report describes many inefficiencies in the market, and possible solutions for market players and policymakers. A separate blog briefly describes why transparency in banking is good business.  In this blog, we share some of the key findings on cost.

Cost of running a bank account

One of the core indicators developed in the report Is the “cost of running a bank account”, which aggregates the cost for withdrawing, transferring and maintaining a current account for the average consumer. We measured the costs for a basic bank customer who withdraws twice a month across different channels (ATM, agent, over-the-counter, etc.); transfers money once a month (through EFT, bankers cheques, RTGS, to mobile money accounts, etc.); and pays for basic account maintenance, such as the monthly ledger fees, bank statements and other basic costs. Below are the results for 22 accounts at the 11 largest banks in Kenya.

Our estimate is that running a bank account in Kenya costs, on average, KSh 6,436 per year, with considerably higher costs for flat fee accounts (KSh 9,289) than for pay-as-you-go accounts (KSh 4,805).  The major difference between accounts depends on the fixed “account maintenance” costs, in particular, ledger fees.

The costs are so diverse because different banks target different segments. However, this is not always the case. In some cases, bank staff recommended accounts not because they were the most appropriate for the needs of the client, but because the accounts were being pushed by the banks’ marketing campaigns. As shown in the chart above, running an account could cost as little as KSh 3,629 (about $35) to a maximum of KSh 13,460 (about $130) – a huge difference for a low-income household struggling to make ends meet. Similar findings apply to other “baskets of transactions”, such as opening an account, transferring money, withdrawing cash and closing an account (see table below). The full report has more details on each specific transaction and provides policy recommendations to improve transparency and efficiency in the market. With 61.6% of the Kenyan population still unbanked, driving down the cost of banking is a prerequisite if banks are to add value for Kenyans. In an upcoming blog, we will explore the drivers of cost, and what is being done to address these so that more low-income people can benefit from banks and other financial services.


Average cost (KSh)     Min Max
Opening an account 1322 155 5660
Withdrawing money 1702 354 2878
Transferring money 2577 1979 4168
Account maintenance costs 2085 99 9585
Closing an account 1002 495 1815
Switching an account 2324 760 6155
Running an account 6436 3629 13460

The price of being banked, FSD Kenya’s new report on transparency and the cost of leading banking services in Kenya will be published on 30th August 2017. For more details see:

[1] The calculations were informed by a recent survey on banking usage by Think Business. For more details on the methodology and selection criteria, see the report 



FSD Kenya newsletter

Stay informed with regular updates from FSD Kenya

Subscribe to our mailing list

Our partners