New wave of mobile banking hits Kenya

The ongoing registration of SIM cards could be the greatest opportunity for mobile banking as providers are encouraging subscribers to get signed in for both the number and the account.

The rationale being floated is that if one is not already on the mobile money transfer service, they can sign up and if they are, but are not on the cellphone account, they can save time by signing up with all of them at a go.

This means subscribers can get the phone number registration, mobile money transfer subscription and a cellphone account at the same time.

Hence as the SIM registration exercise closes at the end of July, it is likely that most of the 17 million mobile phone subscribers could be cellphone account holders, making Kenya one of the most banked countries in the world, and making history in a country where banking penetration is still low, especially in the rural areas.

About a month and a half ago, Equity Bank and Safaricom launched the M-Kesho account, which is proving to be the fastest moving financial product in Kenya’s banking industry.

“We are signing up an estimated 8,000 accounts per day, arguably the largest number of customers we have handled in the history of the bank,” said Equity Bank CEO James Mwangi.

Some 2,500 M-Kesho agents have been set up country wide, after the Central Bank of Kenya gave the nod and the requisite infrastructure was laid down, Mr Mwangi said.

Safaricom CEO Michael Joseph said: “We developed this product based on a need for an affordable and convenient bank account where customers can save and earn interest, access financial services like insurance and emergency credit.”

M-Kesho was launched the same month with Family Bank’s PesaPap, a mobile phone bank account for its 700,000 customers, enabling them to conduct all banking transactions without visiting a branch. By the end of last week, it had signed up some 88,000 customers into the service.
Kevin Kihara, the bank’s senior manager for innovation and strategic partnerships said the bank is targeting 500,000 customers by the end of this year in what he calls a new wave.

“Family Bank believes that the integration between mobile financial services and the personal account is opening a new horizon in the banking landscape,” said Mr Kihara. “The winners will be those who embrace innovation and go beyond mere integration to develop solutions that give Kenyans real convenience, utility and the ability to transact first, then save.”

Family Bank’s Tom Kahigu, the head of alternative business channels and innovations, also said the product will soon be connected to other mobile money transfer services in the country.

The KCB Connect launched in September last year has so far signed up some 200,000 with a target of 6.4 million by the end of the year, nine times the bank’s customers. The cellphone accounts, which Mr Mwangi described as “the greatest innovation of our times,” are set to revolutionalise banking because people no longer require physical bank accounts and ATM cards to access money.

M-Kesho, that was unveiled by President Mwai Kibaki in May, and the other cellphone accounts require a mobile phone to operate, putting Kenya once again on the global ICT map, after the hugely successful mobile money transfer service, Mpesa. All accounts are linked to a mobile money transfer service, Mpesa being the leading.

Mr Mwangi said the bank was working out a similar programme with Zap and Yucash mobile money services operated by Zain and YU, Kenya’s other mobile providers.

The objective was to put the estimated 10 million Mpesa subscribers under M-kesho, significantly reducing the number of the unbanked in the country, by the end of the year, and if the SIM registration is anything to go by, this could be achieved earlier.

Cellphone accounts allow customers to conduct most banking hall activities from a mobile handset, especially applying for and pay back loans, move money between their bank accounts and M-Pesa, check balances, pay bills and shop among others.