How technology affects saving and investing in Kenya

Why we looked at technology and saving

Our 7th Enwealth Conversations report looked at what shapes the saving habits of Kenyans. For this 8th edition, we asked a narrower question: is technology helping people save more, use pension and other financial products, and invest for the future?

Mobile money has changed how Kenyans send and receive money. As our report notes, the same success has not yet carried over to insurance and pension products.

We set out to measure three things: how technology affects the way people use financial products, how well providers in the financial and pension sectors use technology today, and what newer technology trends mean for saving and investing. We surveyed members of the Enwealth personal pension scheme and of occupational schemes we manage, and received 238 responses.

What we found: most savers say technology has helped

Saving is common among the members we surveyed. 72% said they regularly save part of their income. Pensions were the savings and investment avenue they used most, followed by bank savings accounts and chamas.

Mobile devices, which most respondents own, are now used for much more than calls. 35.1% of respondents use their devices for money matters such as loans, savings and investments. Mobile money was the financial service respondents most often reached digitally, followed by banking, pensions and loan apps.

63.29% told us technology has improved their saving and investment habits. The reasons given most often were easier access to information on saving and investing (48.2%), new tech-based products better suited to their needs (37.3%) and positive pressure from peers to save and invest (13.2%).

Not everyone has benefited. 10.1% said technology has not improved their saving. The most common reason in this group, given by 30.8%, was that easy access to online markets has made their spending more rampant. Others pointed to misinformation and to information and choice overload.

Most respondents are at ease with financial information online. 51.48% are very comfortable looking up information on financial products and services on the internet, and 65.43% consider digital sources of financial information reliable. Financial company websites (29.9%) and Business Daily (25.2%) were the sources named most often.

What we found: convenience, trust and data

Mobile apps came out as the most convenient way to save: 53% of respondents rated them very convenient. USSD codes rated lower, with 43% calling them somewhat convenient. Manual transactions rated lowest, with 53% saying they are not convenient at all.

We asked respondents to rank six sectors on their use of technology. Banking came first, followed by capital markets and crypto or digital currency. Pensions came fourth, ahead of Saccos and insurance. Respondents named data protection, information security, insurance services and internet connectivity as areas that need to improve.

Trust in how personal data is handled is low. 48% of respondents were aware of the Data Protection Act, and 56.04% do not have confidence that the data they give financial providers is used only for its intended purpose. Asked how data protection could improve, 40.5% called for tighter data protection rules, 32.9% for educating consumers on their data rights and 31.2% for a crackdown on non-regulated financial entities.

On what holds back the move to digital financial services, 24.5% pointed to a lack of trust in digital platforms because of fraud and scams, and 21.1% to an information gap between consumers and providers. Age made no measurable difference: we found no link between a respondent's age and whether they save regularly, or whether technology has improved their habits.

Beginning with the client in mind is crucial in developing financial products and services, as well as designing the interfaces for consumer interaction.

What this means

For savers and members: technology is already helping most of the people we surveyed to save, mainly by making information easier to find. The risks they named are real too: easy online spending, misinformation and doubts about how personal data is used. Checking that information comes from a credible source matters as much as having it at hand.

For employers and trustees: pensions ranked fourth of six sectors on technology, behind banking. The members we surveyed find mobile apps the most convenient way to save, rely on online information and worry about how their data is used. Some suggested online alerts that tell members how long they will wait to be paid their dues. Our report also calls for data protection training for staff in the financial sector, after finding that some respondents working in sectors with higher data protection risks were not aware of the Act.

For policymakers and the industry: respondents asked for tighter data protection rules, a crackdown on non-regulated financial entities and less paperwork before people can enrol in financial products such as insurance.

What we recommend

• Prioritise user-friendly mobile apps, mobile interfaces and USSD codes, and widen awareness of and access to insurance, money markets and unit trusts.
• Regulators and industry should make sure accurate, credible financial information is available online.
• Use peer-influence initiatives, such as peer-led discussions and success stories, especially among young people.
• Keep monitoring trends and innovating, and build feedback loops so products and interfaces start from the client's needs.
• Consider integrated financial services, where a pension provider, a bank and an insurer offer their products together through an alliance or joint venture.
• Design products for people outside the formal financial system, using digital tools such as digital authentication to overcome documentation barriers.

The full report sets out these recommendations in detail. It also covers how familiar respondents are with artificial intelligence, machine learning, blockchain, big data and the internet of things, and includes members' own suggestions to service providers and government.