CBK’s Innovation Survey Paints a Thin Picture of Research Spending Inside Banks
Mobile banking became widespread across the sector while deeper product development lagged behind
A large section of Kenya’s banking industry went through 2025 without allocating money to research and development, according to findings released by the Central Bank of Kenya, pointing to a sector still relying heavily on established banking models and externally sourced digital systems.
The regulator’s banking innovation survey showed that 44 percent of supervised institutions recorded no spending on research activity during the year. Another 33 percent spent less than Sh5 million, while only 23 percent reported expenditure above that level. The study covered 37 commercial banks, one mortgage finance institution and 14 microfinance lenders.
CBK said lenders still needed to strengthen investment in internal product development and research capability as digital financial services continue expanding across the market.
Most institutions nevertheless reported introducing new products in 2025. Nearly 89 percent of commercial banks said they launched an innovative product during the year, compared with 79 percent previously.
That activity was concentrated mainly around digital delivery and process automation rather than entirely new banking structures. Mobile banking remained nearly universal across the sector, with only two surveyed banks lacking a mobile banking platform.
The findings also showed many institutions increasingly depend on partnerships, outsourced technology providers and hybrid development arrangements to roll out new services. That trend suggests some lenders are expanding digital offerings without building large in-house research operations.
Innovation units remained relatively small across the industry, accounting for 15 percent of total staffing among surveyed institutions. Some lenders also indicated that staffing costs had affected decisions around innovation teams.
The sector’s stable earnings from government securities and traditional lending channels have also reduced pressure on banks to commit large amounts of capital toward experimentation and product research. Competitive pressure increased more sharply after mobile money operators and digital lenders expanded consumer credit and payments services across the market.
The survey further highlighted weak spending on employee development tied to innovation. Seventeen percent of institutions disclosed that they incurred no training costs during the year despite continued investment in digital infrastructure.
Banks cited high implementation costs, slow customer uptake of new services, cybersecurity risks and shortages of specialised talent among the factors limiting innovation efforts.
Regulatory requirements also emerged as a major operational challenge, particularly in areas involving approvals, compliance reviews and data protection obligations.
CBK said balancing rapid digital transformation with strict regulatory standards had prolonged approval processes and increased operational costs for many institutions.
The findings suggest much of the sector’s technology investment is currently directed toward operational efficiency and risk management rather than the creation of entirely new retail banking products. Banks reported increased use of artificial intelligence and machine learning tools in fraud monitoring, cybersecurity, customer service automation and credit assessment.
Investment management and custodial services remained among the areas with the lowest levels of innovation activity during the survey period.
Go to TECHTRENDSKE.co.ke for more tech and business news from the African continent and across the world.
Follow us on WhatsApp, Telegram, Twitter, and Facebook, or subscribe to our weekly newsletter to ensure you don’t miss out on any future updates. Send tips to editorial@techtrendsmedia.co.ke
