a responsive banking industry: kenya bankers … strategic plan... · industry association on 16th...

STRATEGIC PLAN 2019-2023

A RESPONSIVE BANKING INDUSTRY:KENYA BANKERS ASSOCIATION

www.kba.co.ke

Kenya Bankers Association Strategic Plan

TABLE OF CONTENTS

1. Background of Kenya Bankers Association (KBA)..................................................... 02

2. Banking Sector Overview ........................................................................................ 03

3. KBA Vision, Mission and Values ............................................................................... 04

4. KBA 2019 – 2023 Strategic Model............................................................................. 05

4.1 Value Proposition.................................................................................................... 05

4.2 Growth Aspirations ................................................................................................ 06

4.3 Goals and Strategic Priorities.................................................................................. 07

4.4 Strategic Outcomes................................................................................................ 08

4.5 Strategy Implementation and Organisational Chart................................................ 09

4.6 Key Success Factors............................................................................................... 09

4.7 Monitoring and Evaluation....................................................................................... 12

2019 - 2023

01


Background of Kenya Bankers Association (KBA)

Kenya Bankers Association (KBA) was registered as an industry association on 16th July 1962 mainly to cater for the interests of the member banks in negotiating terms and conditions of service of its unionisable employees and as far as possible standardize management practices to ensure harmony in the industry. However, KBA’s role has evolved and changed over time to include promoting industry development and economic growth by engaging the government and sector regulators, including Central Bank of Kenya (CBK), Capital Markets Authority (CMA) and Retirement Benefits Authority (RBA). The KBA transformation was reinforced in 2012 when the Association shed its “three coins” logo and launched a new brand and ambition statement: One Industry. Transforming Kenya.

KBA is the umbrella body of the institutions licensed and regulated by CBK. Its current membership is 47 financial institutions, including commercial banks and microfinance banks. The organization aims at having a reputable and professional banking sector in a bid to best support the sector regulators and ultimately support Kenyans, who entrust their ambitions and hard-earned resources with its member banks.

The KBA 2019 to 2023 Strategic Plan is themed after the Association’s Vision, which is to promote a vibrant and responsive banking industry. The strategic priorities were informed by: the need to consolidate gains from the previous strategic plan; the changing financial and technological landscape; increased sector risks; new financial laws and regulations; alignment with the development priorities of the Government of Kenya; the need for a self-regulated sector; growth of FinTechs and other technology based firms; and the changing public perception of the Kenyan banking sector.

2019 - 2023

02

Banking Sector Overview

The global banking sector is healthier now com-pared to 10 years ago. In the period subsequent to the global financial crisis, there has been a signif-icant improvement in banks’ capital position in response to regulatory demand for increased equity. The sector has witnessed an increase in compliance costs as a result of increased regula-tory-driven investments in systems and talent. It has also witnessed evolving risks, particularly cyber security. The sector will witness further growth as a result of returns on investments in compliance, addressing of legacy conduct issues, and adoption of technology to create efficiencies.

Several critical factors are in the forefront of the future financial industry growth. These include: digital transformation; investment in technology to drive efficiencies; increased competition from non-traditional sources; managing regulatory environment; global political developments and management of evolving risks and privacy.

On the Kenyan front, the banking system has remained resilient despite the shocks experi-enced over the past three years in the form of interest rate capping and bank failures that didn’t have systemic adverse effects. This implies that the industry remained on course in supporting the economy’s development aspirations. Even with instance of unfavorable weather conditions and prolonged electioneering, the Kenyan econ-omy remained on a positive output growth trajec-tory. Nonetheless, the rate of growth of banks’ credit to the private sector has been subdued.

Even as banks continue to support the financial inclusion agenda as they embrace legal, regula-tory and supervisory reforms, they are still grap-pling with credit risks as reflected in the suste-nance of the increase in the levels of Non-Per-forming Loans (NPLS). Gross NPLS as a propor-tion of Gross Loans have risen from 5.6 percent in 2014 to 12 percent in 2018. With the sector having adequate capital buffers to obviate the NPLs leading to instability challenges, measures to address asset quality are strategically important as they are linked to the asset growth and market liquidity issues.

The banking sector is therefore positioning itself in a manner that will enable the balancing between risk-taking to support enterprise and safeguarding asset quality. While the sector’s asset growth has been positive, the rate has been tapered over the past three years. The resump-tion of faster growth will be buttressed by the consolidation of the gains of the recent past years in terms of market confidence and the gradual shift from the increased financial resource allocation that is crowding out the private sector.


2019 - 2023

03

KBA Vision, Mission and Values

2019 - 2023

KBA’s ambition is to be a unifying force that transforms the industry and positively contributes to Kenya’s sustainable economic development. Espousing the “One Industry. Transforming Kenya.” clarion call, KBA employees and members are motivated the KBA Mission that is underpinned by the KBA Values.

KBA Vision A vibrant and responsive banking industry

KBA Mission

KBA Core Values

To promote a competitive banking environment by championing industry development through thought leadership, research, innovation and advocacy

The overriding principles guiding the employees of the KBA Secretariat champion industry growth and development are captured in the “LIKE” acronym:

Lea d ership – Championing industry growth and development

Innovat io n – Creating value through innovation and creative problem solving

Know l ed g e – Exercising knowledge-based decision making including through research and market insight

Ethics – Ensuring all activities that are undertaken are responsible and ethical

Kenya Bankers Association Strategic Plan04

KBA 2019 - 2023 Strategic Model

The KBA Strategic Model comprises of the Association’s value proposition, growth aspirations, goals for the 2019 to 2023 period, and the strategic implementation framework. The Strategic Model was developed following a series of internal and external stakeholder consultations and a review of the previous strategic plan.


2019 - 2023

4.1. KBA’s Value Proposition

The value proposition for KBA is necessary to understand its uniqueness. KBA proposes to its membership and stakeholders a unique value proposition that encompasses:

Improved operational efficiencies

Conducive operating environment

Sector innovation

Knowledge management

Thought leadership

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2019 - 2023

4.2. KBA Growth Aspirations

KBA is a Business Membership Organization (BMO). BMOs operate at different levels, based on their capacity and resourcing. The aim of this strategic plan is to ensure that KBA is a Level 4 BMO as indicated in the figure below. In addition, within each of the four key strategic focus areas, a set of strategic initiatives and activities which will be pursued in the short, medium and long-term have been identified. KBA shall be guided by its core values to ensure the identified institutional chal-lenges are mitigated, while at the same time ensuring that the available resources are utilized in such a way that they create synergy in both the desired outputs and outcomes.



2019 - 2023

4.3. KBA Goals and Strategic Priorities

4.4. Strategic Outcomes

The overarching goal for KBA within the strategic period is to advocate for a conducive operating envi-ronment for improved access to financial services. The overall goal is supported by the following four Strategic Priorities that will form the institutional focus for the period 2019 to 2023:

Successful implementation of KBAs strategic plan will result in the realization of the following broad strategic outcomes that will enhance the Association’s policy role, better support the member banks and enhance the Secretariat’s sustainability:

Advocate for a vibrant and responsive policy and regulatory framework for financial sector sustainability;

Enhance KBA member satisfaction and capacity building;

Advocate for leveraging technology and innovations to drive efficiencies in the banking sector; and

Enhance KBA secretariat capacity and sustainability.

· Improved access to financial services

· Improved and conducive legislative environment for banking

· Reduced cost of doing business in the sector and improved banking efficiencies

· Improved relationship with the sector regulators

· Improved public perception of banking

· Increased sector customer satisfaction through customer centrism

· Improved secretariat capacity and sustainability

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Vision:A Vibrant and Responsive

Banking SectorMission: To promote a competitive banking environment by championingindustry development through thought leadership, research, innovation

and advocacy.

Goal: Advocacy for a conducive operating environment for improvedaccess to financial services

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Core Values: Leadership; Innovation; Knowledge; Ethics

KBA Strategy House

2019 - 2023

Summary of KBAs Strategic Priorities and Strategic Outcomes


Strategic Priorities Strategic Outcomes

Removal of interest rate capsImproved banking environmentEnhanced research and policyEvidence based advocacy and lobbying enhancedImproved relationship with sector regulators

Financial sector sustainabilityIncreased acess and utilization of financial servicesImproved customer centricity and public image of bankingYouth/ Gender / PWD access to financial services increased

Enhanched relationship management

Operationalized innovation frameworkDeveloped cyber security standards

Developed and implemented R7 D frameworkIncreased utilization of PesaLink

Improved financial sustainabilityOptimal organiztional structureIncreased secretariat capacityIncreased employee satisfaction levelsRedefined governance structure and mandateImproved internal business processes Improved organizational culture

Implemented appropriate emerging technologies forthe banking sector

Developed member capacity in key banking areasEnhanced member inclusivityDeveloped and implemented sector standards

Advocate for a vibrant andresponsive policy and

regulatory framework forfinancial sector sustainability

Enhance member satisfactionand capacity building

Enhance secretariat capacityand sustainability

Leverage technology andinnovations to drive

efficiencies in the bankingsector


2019 - 2023

4.5. Strategy Implementation

Plan implementation is the action stage of the strategic plan. The activities central to plan imple-mentation are: establishing annual objectives; devising appropriate policies; allocating resources; and reviewing organizational arrangements/structures. For the operationalization of the delivera-bles in the implementation matrix, the management will be required to derive annual action plans to guide month-on-month activities and performance.

4.6. Key Success Factors

In implementing the strategy, KBA will need to consider several critical success factors. These factors will need to be addressed in order to make the transition from the development of this Stra-tegic Plan and the identified strategies to the implementation phase.

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ResourceFactor

MembershipFactor

SharedValuesFactor

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2019 - 2023


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2019 - 2023

Factor

Governance Factor:Strong Governing Council

The capacity of KBA to maintain strong governance structures to sustain itsvision is The Governing Council must own the strategic plan andsupport its Success is also hinged on the alignment betweenthe Strategic Plan and the Structure.

Management Factor: Delivery

The and of planned require an management that establishes strong systems and structures.

It will also require changes to the day-to-day policies and procedures of the for management.

Shared Values Factor:Ethics and Values

It is for members and employees of KBA to share similar values,culture, and footprint among other fundamental values.Employees should have a culture that inculcates teamwork, andservice KBA should ensure minimal of interest arisewithin the

Factor:Driving Buy-in

Successful strategy is greatly by the level ofstakeholder ownership of the strategy. To ensure support, KBA should enable

strategy forums and of the variousplanning documents to key stakeholders especially members and employees.

Performance Factor:Performance Management, M&E Systems

Clear and Performance and Measurement Systems (PMS) are in learning and growth. Without such a system,

which underpins the success of KBA and this strategy cannot be tracked, measured and corrected where necessary. An Monitoring and system to track and report on key measures regularly ismandatory.

Membership Factor:Value Delivery

The success of KBA is strongly founded on membership. A strongmembership base with and members must therefore be grown and sustained. KBA must therefore clearly strategies to and retain member’s commitment and support.

Resource Factor:Financial, Human Resources

Human and capital is in sustaining any In to all the factors, there must be a re-alignment of structures andbudgets against the plan in order to execute the mandate of KBA to itsmembers. The capacity of KBA to operate sustainably, recruit and retaincompetent human capital is therefore a factor.

Risk Management Factor: Risk

Establishing a Risk Management Plan to help assess and respond to the risks involved in the plan is One of the risks to be

managed by all is risk.

The Implementation Framework Critical Success Factors

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4.6.1. Alignment of Organizational Structure with the Strategic Plan

In order to deliver the requirements of the current strategic plan, KBA must implement the desired human resource structure by employing required key personnel. Such a structure should be aligned to the current strategic plan. The implementation of the organization structure will be phased in the strategic plan implementation period, depending on efficiency levels achieved.

4.7. Monitoring and Evaluation

This Strategic Plan will be subjected to a continuous review of performance on the various deliver-ables. There shall also be annual reviews of the Plan. The reviews will be focused on how the avail-able inputs have been used and what outputs and short-term outcomes have been produced. This review shall also focus on challenges, issues and key lessons learnt.

The monitoring activities will result to identifying any gaps or deficiencies which will then be addressed by management. Daily, weekly, monthly and quarterly reporting will be critical for the monitoring function. On the other hand, the evaluations will be guided by key questions to address key evaluation criteria, including relevance, effectiveness, efficiency, impacts and sustainability.

2019 - 2023

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Kenya Bankers Association P.O.Box 73100 - 00200 Nairobi, Kenya

13th Floor, International House Mama Ngina Street, Nairobi

Contacts: +254-20-2221704 / +254-20-2217757+254-20-2224014 / +254-20-2224015

Email: [email protected]


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