Lack of a data protection law to assure players in the financial sector of the safety of their corporate information is one of the major factors that have made banks to prefer handling their customer services internally.

“A law on data protection has been held back because it was tied to the Freedom of Information Act. We expect both laws to be approved by the Cabinet in their next few meetings,” Bitange Ndemo, permanent secretary in the Ministry of Information, said.

Analysts say that banks, for instance, fear litigation that is likely to come with disclosure of customer information.

They argue that even with the passage of the data protection law, banks may only outsource less sensitive processes like loan applications.

“There is a bit of concern with regard to quality of services offered by local BPO firms,” said Eric Musau, an analyst at Renaissance Capital.