For decades, Kenyan banks competed for customers through branch networks, lending products, interest rates and customer service.

That competition is changing.

As digital payments become embedded in everyday financial life, customers are increasingly judging banks by something much more immediate: how easy and affordable it is to move money.

A customer may rarely walk into a banking hall today. Instead, their relationship with a financial institution may be built almost entirely through an app, an ATM, a payment notification or an account-to-account transfer.

They transfer money to family members, pay suppliers, settle school fees, receive salaries, pay bills, shop online and move funds between accounts, often without ever interacting with a bank employee.

The result is a new question for banks:

How much does it cost customers to use the money they already have?

Kenya's banking relationship has moved to the phone

The transformation of Kenya's financial sector has been driven by the rapid adoption of mobile and digital payments.

Banking is no longer an occasional activity that begins and ends at a branch. For many consumers and businesses, it is a continuous digital process.

The latest World Bank Global Findex data illustrates the scale of this shift.

Across low- and middle-income economies, 61% of adults made or received a digital payment in 2024, representing 82% of account owners. That was a 27-percentage-point increase from 2014.

Kenya is among the markets where digital payments have become particularly established.

The World Bank's latest data shows that 94% of Kenyan adults have a financial account, while 89% made or received a digital payment during the previous year.

That changes the meaning of financial inclusion.

Having an account is no longer the end goal.

People want to be able to use that account quickly, conveniently and affordably.

Access is no longer enough

A decade ago, simply having access to formal financial services was a major achievement.

Today, the conversation is increasingly moving towards the quality and cost of access.

A bank account may allow a customer to hold money, but the customer may still face fees every time they transfer funds, withdraw cash, pay a bill or send money to another institution.

Each individual charge may appear small.

The problem is what happens when those charges accumulate.

A customer making dozens of transactions every month can begin to notice the difference between a bank that consistently charges for everyday money movement and one that removes some of those costs.

Over time, those experiences can influence how customers evaluate the value of their banking relationship.

The question becomes less:

“Does my bank give me access to my money?”

And more:

“How much does my bank charge me to use it?”

Digital payments are changing what customers expect

The shift is not happening in Kenya alone.

The World Bank says digital payments have become the most widely used formal financial service across low- and middle-income economies, with digital payment usage significantly outpacing formal saving and borrowing.

Digital merchant payments are also becoming more common, including payments made to businesses both online and in physical stores.

This has created a customer who is increasingly accustomed to digital transactions.

The technology itself is becoming less visible.

What matters is the result.

Did the money arrive?

How quickly did it arrive?

Was the transaction secure?

How much did it cost?

Those four questions may matter more to a customer than the number of features available inside a banking application.

Customers are becoming less loyal to a single bank

Another important change is that customers no longer necessarily depend on one financial institution for everything.

Recent PesaLink research found that 57% of users maintain relationships with multiple financial institutions.

That matters because it makes switching easier.

A customer could receive a salary through one bank, keep savings somewhere else and use another institution or digital wallet for everyday transactions.

Businesses can do the same.

An SME may receive payments through one provider, pay suppliers through another and maintain its operating account at a traditional bank.

The result is a much more competitive financial ecosystem.

A bank is no longer necessarily competing to become a customer's only financial institution.

It may instead be competing to become the institution a customer chooses for a particular financial activity.

And transaction costs can influence that decision.

Affordability is becoming part of the customer experience

PesaLink research also highlights this changing behaviour.

According to the research cited in the report, 64% of account-to-account payment users surveyed said affordability influenced their choice of payment service, while more than 60% identified speed and convenience as important factors.

The combination is significant.

Customers don't necessarily want the cheapest service if it is slow or unreliable.

They want something that is fast, convenient, secure and affordable.

That is creating a new baseline for digital banking.

A service that takes days to complete a transaction can feel outdated when instant alternatives are available.

Likewise, a recurring transaction fee can feel increasingly difficult to justify when customers can find another provider offering a similar service at a lower cost.

SMEs have even more at stake

The cost of transactions becomes particularly important for small and medium-sized businesses.

An individual customer might make several transfers in a week.

An SME can make several every day.

Businesses may need to pay suppliers, employees, distributors, contractors and service providers while simultaneously receiving payments from customers.

For companies operating on tight margins, transaction fees can become a recurring operating expense.

Kenyan technologist Mbugua Njihia told TechMoran that the cost of transactions can be particularly important for SMEs because they may make multiple payments and receive large numbers of customer transactions over relatively short periods.

For these businesses, the issue is not simply convenience.

It is cash flow.

Every cost attached to moving money potentially reduces the amount of working capital available to the business.

Removing unnecessary transaction costs can therefore have an effect beyond making payments feel cheaper.

It can help businesses retain more of their available cash, simplify payment processes and make digital transactions more attractive.

Freelancers and households are feeling the same pressure

The same principle applies outside the business world.

A freelancer may receive payments from several clients, transfer money into savings, pay subscriptions and send money to family members.

Families may use digital channels to pay school fees, settle utility bills and send money to relatives in different towns.

Young professionals may move funds between spending, savings and investment accounts.

These are no longer occasional banking activities.

They are routine.

And because customers repeat them frequently, the cost attached to each transaction becomes part of their overall perception of the bank.

This is why a small fee can become a big loyalty issue.

One transaction may not matter.

Hundreds of transactions over months can.

Real-time payments are raising the standard

Kenya's real-time payment infrastructure is also changing consumer expectations.

PesaLink, the country's account-to-account instant payment network, connects more than 80 banks, SACCOs and financial institutions and serves millions of users.

Its growth demonstrates how accustomed consumers and businesses have become to moving money electronically.

Once customers become comfortable with instant transfers, delays become harder to accept.

The same applies to cost.

Once customers experience low-cost or zero-fee transfers, recurring charges on routine transactions can start to feel like unnecessary friction.

This creates a new standard for banking:

Speed is expected.

Security is expected.

Convenience is expected.

Affordability is increasingly expected too.

How SBM Bank Kenya is responding

This shift in customer behaviour is also influencing how banks compete.

SBM Bank Kenya is positioning its digital banking strategy around reducing the cost of everyday money movement through its Mfukoni App and #TumaForFree campaign.

Under the offer, customers can make eligible PesaLink and interbank transfers without transaction charges.

The significance goes beyond the value of a single transfer.

Customers regularly move money between financial institutions for a wide range of reasons — paying suppliers, sending money to relatives, settling bills or managing funds across accounts.

Removing the transfer fee reduces one of the points of friction associated with those activities.

For an SME making multiple payments, the potential savings can accumulate.

For an individual customer, the proposition is simpler: when a transaction qualifies under the offer, moving money between participating financial institutions does not come with an additional transfer fee.

It is important to distinguish this from saying that all banking services are free.

The proposition specifically targets eligible transfers.

The strategy comes as SBM expands

SBM Bank Kenya's digital push also comes against a backdrop of growth.

In the first half of 2026, the bank reported KES 547 million in profit before tax, up from KES 202 million a year earlier.

Customer deposits reached approximately KES 94 billion, while total assets stood at about KES 126 billion.

Those figures do not establish that zero-fee transfers caused the bank's financial growth.

They instead provide context for a financial institution expanding its business while attempting to strengthen its digital customer proposition.

The bigger strategic question is whether reducing transaction costs can help turn everyday digital interactions into stronger customer relationships.

Banking competition is becoming less about branches

For years, banks invested heavily in physical infrastructure.

More branches meant greater visibility and, historically, easier access to financial services.

Mobile banking has changed that equation.

A customer can now interact with a financial institution from a home, office, café or bus.

The branch may still matter for certain services, but everyday banking is increasingly happening elsewhere.

That means banks are competing inside the customer's phone.

The winning experience may not necessarily be the application with the most features.

It could be the one that makes routine tasks feel effortless.

A customer does not necessarily care how sophisticated the technology behind a transfer is.

They care that the money arrives quickly, the transaction works securely and they are not surprised by an unnecessary charge.

The global shift towards cheaper, faster payments

Kenya's experience is part of a broader transformation in financial services.

Across the world, consumers and businesses are moving towards digital wallets, account-to-account payments and real-time payment systems.

As payment infrastructure becomes more interoperable, the ability to move money between institutions becomes easier.

That creates more choice for consumers.

And more choice makes traditional customer loyalty harder to maintain.

A customer who once had to remain with a bank because it had the nearest branch can now potentially move their money digitally to another institution in seconds.

A business that once accepted transaction charges as part of operating costs can now compare providers and look for more affordable alternatives.

The competitive advantage is therefore shifting.

The future of loyalty may be built one transaction at a time

The banking relationship is increasingly being shaped by thousands of small interactions.

A successful transfer builds confidence.

A failed payment creates frustration.

A fast transaction reinforces convenience.

A recurring charge creates friction.

A zero-fee transaction can create a sense of value.

Individually, these experiences may appear insignificant.

Collectively, they can determine whether a customer stays, expands their relationship with a bank or starts moving more of their financial activity elsewhere.

That is why transaction pricing is becoming more than a revenue decision.

It is increasingly a customer-loyalty decision.

For banks, reducing fees can mean giving up revenue from individual transactions.

But if doing so encourages customers to keep more of their financial activity within the institution, the broader relationship could become more valuable.

That is the bet behind propositions such as SBM Bank Kenya's zero-fee eligible transfers.

The next banking battleground

Kenya's banking sector has already undergone a major transformation from branches and paperwork to mobile and digital services.

The next stage may be about making those digital services cheaper and more seamless.

The banks that succeed will need to compete on more than access.

They will have to consider the total experience of moving, receiving, saving and spending money.

For customers, that means the definition of good banking is changing.

It is no longer enough for a bank to simply give people access to their money.

Customers increasingly want to know how quickly they can use it, how securely they can move it and how much they will have left after doing so.

As digital payments become the infrastructure of everyday commerce, every transaction becomes another opportunity for a financial institution to strengthen — or weaken — its relationship with the customer.

In this new environment, loyalty may not be won through another branch or another banking feature.

It could be won by simply making it easier and cheaper to move money.