CENTRAL BANK OF KENYA
INTRODUCTORY REMARKS
PROF. NJUGUNA NDUNG’U
GOVERNOR
SECOND SCENARIO BUILDING WORKSHOP ON
THE FUTURE OF FINANCIAL SERVICE DELIVERY IN KENYA
Crowne Plaza Hotel, Upper Hill
Friday, April 16, 2010

Chief Executives of Commercial Banks here present;
Distinguished Guests;
Colleagues;
Ladies and Gentlemen;
I am honoured this morning to be addressing this distinguished gathering. Allow
me therefore at the outset to thank you for accepting our invitation to attend this
second scenarios building workshop on the future of financial service delivery in
Kenya. I am deeply convinced that our deliberations today will go a long way in
shaping the future of our financial industry as was the case with the first workshop
held last year.
Ladies and Gentlemen: This year, Nairobi Scenario II Workshop comes at a
time when a number of countries around the world are increasingly pursuing the
development of branchless banking policy frameworks. This indicates branchless
banking is receiving increasing international attention and capturing the
imagination of a wide array of players and international bodies. In particular, as
part of its commitment to financial inclusion, the G-20 has established the Access
Through Innovation (ATI) subgroup of the Financial Inclusion Experts Group.
Ladies and Gentlemen: Kenya’s financial inclusion agenda is premised on its
current development blueprint, Vision 2030. Under this Vision, Kenya aspires to
be a middle income country by 2030 and the financial sector is expected to
mobilize substantial financial resources required to realize this Vision. In addition,
savings rate are targeted to increase to 32.0 percent within the period. For this to
happen, financial reach, inclusion, and deepening to increase financial
instruments will need to take place. The Central Bank on its part will have to
foster stability and accessibility of the Kenyan financial system. In this regard, we
will continuously implement reforms to:-
• Strengthen the banking sector through an enhanced legal and regulatory
framework including scaling up minimum capital requirements.
• Address structural rigidities that impact adversely on the cost of financial
services. Some of these we need to learn from you and then we can improve the
environment for you.

• Enhance efficiency and safety of payment and settlement systems through use
of innovative internet and mobile based solutions. As it were, reliable and
efficient payment systems increase both the effectiveness of monetary policy
and minimize payment system risks.
Ladies and Gentlemen: In order to accomplish the tenets of branchless
banking across the globe, we need to unanimously come up with minimum
benchmarks to guide its application and regulation. These may include: the need
for creation of enabling environments for private sector initiatives to thrive;
continuous private-public sector dialogue to facilitate formulation of innovative
policy solutions; and balancing access with stability to safeguard integrity and
stability of the financial system.
Further, today’s scenario building process will benefit a lot from the lessons of the
four scenarios of the Scenario Building 2020 by CGAP and DFID. These are;
(a) Existence of untapped opportunities in the environment that can be
exploited through innovation.
(b) The fact that opportunities are available everywhere including post-conflict
countries which can potentially be exploited through branchless banking.
(c) Successful branchless banking regimes may be vulnerable to disruptions
like court decisions and other underlying forces which make branchintensive strategies unviable. However, data-enabled phones may present
the best strategy to mitigate such risks.
(d) Successful transition to a cashless society may present a big challenge to
successful mobile phone money transfer service providers, regulators, and
the economy.
Ladies and Gentlemen: I would like to reiterate that while the Central Bank
welcomes innovative products, it evaluates all such products to ensure safety and
efficiency concerns are adequately addressed. The Central Bank has the necessary
capacity to properly evaluate and appraise technology driven financial services to
ensure they meet international standards and provide comprehensive consumer
protection.

Finally, may I assure you that the Central Bank will always strive to provide an
enabling legal and regulatory framework to encourage innovations by all players
in our financial sector in order to enhance access to financial services. In this
regard, we will continue to work with stakeholders as we are doing today to put in
place an enabling environment for business to thrive.
With these remarks, Ladies and Gentlemen, it is now my pleasant duty to declare
this workshop open.