Strategies used by Equity Bank Limited Kenya in international expansion
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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 vi 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.