Bank clients to get faster funds transfers after clearing system upgrade

• ACH upgrade expected to reduce processing errors, improving turnaround time
• New standard to enable real-time analytics and data analysis

Nairobi…March 3, 2023: Bank customers are expected to access faster clearing services for...

cheques, direct debits and electronic funds transfers following an upgrade of the Automated Clearing House (ACH) to the ISO 20022 standard. The ACH is established to facilitate transfer of payments.

Announcing the system upgrade earlier today, banking industry umbrella body, Kenya Bankers Association (KBA), said the new standard is expected to facilitate a reduction in processing errors, improving turnaround times in Electronic Funds Transfers.

KBA Chief Executive Officer Dr. Habil Olaka said the transition is part of efforts by the Association to continuously improve the payments system infrastructure and providing more efficient and robust systems in line with the National Payments System strategy and vision.

‘’This transition also resonates with the Kenya Bankers Association Strategic Plan for the period 2019 to 2023, which seeks to facillitate acess to efficient and affordable financial services through enhanced technological innovation and sector-wide efficiency programs.I have no doubt that the new sytem will significantly improve clearing services for cheques, Direct Debits and Electronic Funds Transfers in the country. The new standard will also provide enhanced payments insights, supporting banks’ risk managenment initiatives and informing policy decisions towards promoting a responsive financial sector,’’ said Dr. Olaka. 

Central Bank of Kenya noted that the transition is  a major milestone for the ACH and the entire payments community in Kenya, adding that the upgrade is  in line with global efforts to adopt and domesticate the ISO20022 Standard on financial messaging. ‘’The aim of this process is to have a standard across the world that will increase the consistency and richness of structured data for transactions, thereby enhancing the efficiency, effectiveness, and transparency of payment services,’’ said CBK in a statement.

In addition, the industry regulator indicated that the transition to the ISO20022 Standard will bring major improvements to customers and institutions in the ACH, noting that it is  in line with the National Payments Strategy 2022 – 2025 that was launched in February 2022. ‘’The Strategy is anchored  on the vision “a secure, fast, efficient and collaborative payments system that supports financial inclusion and innovations that benefit Kenyans,’’ said CBK.

The move to the new standard is designed to unlock opportunities for banks and other financial sector players, providing improvements in operational efficiency, enhancing customer experience, better Know Your Customer (KYC) information exchange as well as providing a platform that will enable tighter payments integration and innovative new services.

Introduced in 1998 through partnership between KBA and Central Bank of Kenya (CBK), the ACH is established to facilitate the exchange and settlement of payment instruments such as cheques and Electronic Funds Transfers between Commercial banks.

The ISO 20022 upgrade succeeds enhancements conducted on the platform in 2019, centralizing banks’ direct debit instructions and automating mandate applications. It also follows the 2019 inclusion of remitter details on all payment instructions, enabling banks to immediately identify the payment instrument payee or remitter, shortening turnaround times while mitigating disputed transactions and fraud.

Mr. Fidelis Muia, KBA Technical Services Director, said the ISO 20022 upgrade is the next milestone, where the banking industry is now adopting a fully international standard, enabling integration to any payments system in the world.

‘’This brings Kenya to the level of any international standard in terms of payments within the clearing house and other payments streams that will be in future implemented in the Kenya payments system’’, he said.

Sybrin Kenya Operations Director Mr. Joe Kiragu noted that the ISO 20022 standard will offer global interoperability.’’ The Kenya ACH will now be able to integrate with any ACH globally and any payments system out there, ‘’ he said.

Currently, local currency cheques clear on a T+1 cycle with value available to the payee one day after the cheque is presented by the paying bank to the Automated Clearing House. Foreign currency cheques previously cleared on a seven-work day cycle, which has now been reduced by five days to T+2 or two days after the cheque is presented in the ACH.           

About the Kenya Bankers Association:

KBA (www.kba.co.ke) was founded on 16th July 1962. Today, KBA is the financial sector’s leading advocacy group and banking industry umbrella body that represents total assets in excess of USD 60 billion. KBA has evolved and broadened its function to include advocacy on behalf of the banking industry and championing financial sector development through strategic projects such as the launch of the industry’s first P2P digital payments platform PesaLink. In line with the Government’s policy on public-private partnerships, KBA and Central Bank of Kenya have implemented key projects such as modernization of the National Payments System through the Automated Clearing House, implementing the Real Time Gross Settlement System (RTGS), and the Kenya Credit Information Sharing Initiative. The KBA members are comprised of commercial banks and deposit taking microfinance banks. For more information, visit www.kba.co.ke.

Media Contacts:

Christine Onyango
Director, Communications and Public Affairs
Email: conyango@kba.co.ke
Phone: 0711562910