##meate ] … every corner of our minds. ” 3 four planks underpin our vision. first, the banking sector must become customer - centric. banks must truly adopt customer - centric business models to compete successfully in the future. products, channels and indeed pricing must be informed by customers ’ needs, preferences and affordability. technology provides banks with the opportunity to intimately understand their customers, enabling them to map their customers ’ journeys end - to - end. this will facilitate the identification of friction points for customers, allowing prompt action by banks to remove them and enhance the customers ’ experience. it is worth noting that even as banks embrace technology, their customers have the same expectations as other customers around the world and subject banks to the same standard they hold technology giants such as apple, amazon and alibaba. customers want fast and simple user experiences that serve their need. with data analytics capabilities, banks can use customers ’ digital footprints and identities to design suitable well - tailored products. customer feedback obtained through tailored research could also be used to inform the john maynard keynes the general theory of employment, interest, and money, 1935 improvements that will enhance customer experience. customer - centric models also require banks to identify cost savings that can be passed on to customers in the form of lower interest rates, commissions and fees. finally, customer relationship management must be at the heart of banks ’ business models. it should also be acknowledged that the outlook of shareholders of banks is crucial for the move towards a customer - centric business model. part of the implicit cost in the current business models relate to shareholders ’ expectations of the return on assets ( roa ) / return on equity ( roe ). high roa and roe expectations when priced into a banks model inevitably raise the costs of product delivery. there has been concerns about the kenyan banking sector ’ s high average roa of above 3 percent and roe of close to 30 percent, when compared to similar economies. shareholders must therefore temper their roa and roe expectations if banks are to deliver affordable products. in any case, the high roas and roes are not sustainable in the long term as customers cannot afford the high cost of banking services indefinitely. second, risk - based credit pricing is imperative. in cbk ’ s vision, customer credit histories must amount to something. good credit histories portend a less risky customer and therefore lower interest rates. customers cannot be treated with a broad brush, focusing on the few defaulters while not rewarding the majority

central bank of kenya the kenya bankers association sixth annual banking research conference radisson blu hotel, nairobi keynote speech by dr. patrick njoroge governor of the central bank of kenya september 28, 2017 as prepared for delivery good morning! it is an honour for me to join you at the kenya bankers association ( kba ) sixth annual research conference. at the outset, let me applaud kba for organising this annual conference over the last six years. the conference provides an excellent opportunity for us to reflect on the kenyan banking sector ’ s transformation journey, its milestones, challenges and opportunities. the theme of the conference “ intermediation towards deepening of financial inclusion ” is especially fitting, given kenya ’ s progress on financial inclusion and pondering the challenges that lie ahead. allow me to begin my remarks by considering kenya ’ s recent experience on this front, and specifically, as concerns the banking sector in its role of financial intermediation. over the past ten years, the proportion of the adult population in kenya with access to formal financial services and products has risen from 27 percent in 2006 to 75. 3 percent in 2016. this represents a remarkable achievement by any standard, and kenya ’ s success in financial inclusion has been widely acclaimed, locally and internationally. for instance, two eminent institutions recently recognised kenya for its digital financial inclusion achievements. in july 2017, the fletcher school at tufts university ranked kenya fourth out of sixty countries on the digital finance momentum index in its 2017 digital planet report. 1 in august 2017, the brookings institute ranked kenya first in its annual https : / / sites. tufts. edu / digitalplanet / files / 2017 / 05 / digital _ planet _ 2017 _ final. pdf financial and digital inclusion project ( fdip ) scorecard, for the third year in a row. 2 these reports recognise kenya ’ s efforts to develop robust policy environments and regulatory infrastructure for the development of digital finance. while the important role of financial inclusion in economic development cannot be overemphasized, kenya ’ s significant strides in this area may obscure some crucial blind spots. let me highlight two of them. first, 25 percent of adults in kenya still do not have access to any form of financial services. this is further reinforced by noting the large swathes of the country, particularly in the northern regions, that are largely devoid of financial services access points. much work remains to be done. second, while we have succeeded in enhancing access to financial services, we