A system malfunction during a key data migration allowed customers at KCB Group, Kenya’s largest bank, to withdraw a total of $7.7 million (KES 1 billion) over their account balances between October 11 and October 31, according to sources familiar with the matter.
Following the overdrafts, KCB has restricted affected accounts and informed customers of potential loan recovery measures. The issue arose as the bank transitioned its databases from on-premise servers to a colocation center, where a synchronization error in the integration process led to delayed balance updates.
A source disclosed, “After the server migration, account balances weren’t updating in real-time on the backend, which allowed customers to overdraw their accounts.” The KCB-M-Pesa savings accounts, designed for short-term loans and savings, were reportedly impacted the most, with some customers able to withdraw up to three times their saved amount.
The three-week-long glitch highlighted KCB’s challenges in modernizing its IT infrastructure. During the crisis, a high-priority internal notice indicated that staff often couldn’t access affected systems, leading to service interruptions and complete outages.
KCB Group has declined to comment on the matter. Top executives held a crisis meeting on October 12 to address the issue, focusing on potential recovery solutions, with follow-up meetings continuing since.
Fraud remains a growing problem in Kenya’s financial sector, where banks collectively lose around $130 million each year to various schemes, according to TransUnion Africa. In 2023, Kenya’s Financial Reporting Centre (FRC) flagged over $600 million linked to fraud, corruption, and other illicit activities.