Strategies used by Equity Bank Limited Kenya in international expansion
Abstract
ABSTRACT
The past five years have seen rapid growth in the operations of banks in Kenya especially in
the move to establish units in the East African region. This was in spite of the much
proclaimed economic crunch that hit most western banking and other financial institutions. The
period has seen banks such as Equity Bank and Kenya Commercial Bank move to Tanzania,
Uganda, Southern Sudan and Rwanda.
The impetus for the growth and strategies used in this expansion has left many questions
unanswered. For example, was it really an economic meltdown or was it a paradigm shift of
economic development to the African continent? Had the African continent finally awakened
to take over economic development from the western hold?
The trend has brought to an end the assumption that banks were meant for the upper classes in
society. The inclusion of low income earners in the banks has been seen as the main stimulant
to the rapid expansion of banks in Kenya like Equity Bank Ltd.
The move had forced other leading banks to rethink their stance and develop products and
services for the lower market in order to keep up with the competition. In so doing, the rate at
which financial assistance has hit the market in the country has brought about a business boom
never experienced in the region before.
The diversity of credit ranging from small businesses, jua-kali sector, low-income groups,
down to financing of farmers was a new move in as far as banking was concerned. The process
of banking for the unbanked in Africa had seen millions of people previously considered being
un-credit worth operate accounts with banks and not micro finance institutions.
This new market was what had brought the move to new territories by banks in the region.
Branches opened continuously across the region in a bid to tap resources and avail facilities to
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people who could not be reached. In so doing there was emergence of new joint ventures,
partnerships, mergers, acquisitions and other market entry strategies being put into play by
banks as the scramble for customers continued. Besides, there were urgent bids for the creation
of customer specific products depending on the peoples’ economic activities e.g. for fishermen,
tourists, florists, cash crop growers etc. Merry-go-round groups had quickly been transformed
by banks to groups financing creating a wider reach.
With all these the move to embrace technology had also been put to play with the onset of
mobile banking and partnering with mobile service providers to use mobile shops as banking
centers. Agency banking model that had just been embraced had further expanded the
distribution of banking services leading to the establishment of village banks. Financial
services were then provided from the supermarkets to canteens with much ease.
With all that shaping of the banking industry in the country it was hard to know what the next
move could be but what was clear was that Kenyan banks were taking financial empowerment
to another level. This was not only happening in Kenya but also within the wider region as a
whole.
There were many strategies that were used by banks to expand in their quest for international
expansion. The common ones were acquisitions, start-ups and joint ventures. Although this
was the case, there was only limited consensus and banks, Kenyan banks for that case, in
which the best option could be represented; most banks chose the same or varying options
when they were expanding across the borders.
Publisher
University of Nairobi School of Business