Banking sector digital and regulatory shifts in Africa

The banking sectors in Kenya and Ghana are experiencing significant transformations characterized by digital adoption and evolving regulatory frameworks.

In Kenya, financial institutions have demonstrated a dual approach to growth. While digital and mobile banking channels handle the vast majority of transactions—with some institutions reporting rates between 92% and 97%—banks are simultaneously expanding their physical branch networks. Lenders such as I&M Bank, Family Bank, and NCBA are investing in physical presence to build trust and reach emerging towns and MSMEs, even as customer loyalty increasingly depends on the cost and convenience of digital transactions.

To bolster sector resilience, both nations are implementing stricter capital requirements. Ghana has established a minimum paid-up capital requirement of approximately USD 35 million for universal banks. Similarly, Kenya is pursuing a significant increase in minimum core capital for commercial banks, with statutory targets rising from KES 1 billion to KES 10 billion to accelerate scale and protect depositors.

Regulatory oversight in Kenya is intensifying through a new draft framework from the Central Bank of Kenya (CBK). This framework aims to tighten supervision of domestic systemically important financial institutions, including Equity Group, KCB Group, NCBA Group, Co-operative Bank, and I&M Bank. Under these rules, the CBK could restrict these institutions from expanding operations or launching new products if such actions are deemed to increase systemic risk. These institutions will be assessed annually every December based on size, complexity, and economic importance.

Regarding MSME financing, Sidian Bank CEO John Okulo has proposed utilizing capital markets to bridge funding gaps. With commercial banks currently allocating roughly 25% of loan portfolios to MSMEs, Okulo suggested that risk-sharing bonds, such as those planned by FSD Africa, could connect MSME debt to institutional investors like pension funds to help banks increase exposure to smaller businesses.