Banking Goes Truly Mobile
Peter G. Mwangi
Imagine a bank that accepts savings and withdrawals for as little as Kes 100 ($1.24) at a time. Imagine a bank that gives credit of Kes 100 at very competitive rates. Better still, what if the bank was small enough to fit into your pocket? Welcome to M-banking in Kenya.
Orange Kenya last week launched Orange Money in the Kenyan market. Orange partnered with Equity Bank to bring Orange Money into Kenya. Orange Money accounts are based on the Equity mobile banking platform and are mapped onto Equity Accounts, meaning that Orange Money customers can perform normal bank transactions on their mobile phones.
Transactions will include bank to bank transfers, bank to mobile transfers and access to SWIFT inter-bank transfers. Initial transactions will be limited to Kshs. 100,000 (US$ 1250), though transactions can be made limitless like normal bank transactions upon individual request. In addition, Orange Money customers will be able to transfer money across all four mobile networks in Kenya and pay for goods and services through an integrated e-commerce platform.
Equity Bank will be using the Orange Money platform to roll out its retail banking agency model. The retail banking services will be provided by agent outlets such as shop keepers and convenience stores. This includes withdrawals, deposits, bank statements and lending. T he joint agents will number about 6,000 and will earn commissions based on whose product they sell. This means that Equity Bank will pay commissions accrued on banking services while Orange will pay commissions accrued on sale of telecommunication products and services.
Earlier in the year, Equity bank partnered with Safaricom, Kenya’s biggest MNO, to launch M-KESHO as a full savings account. Like M-PESA accounts, M-KESHO accounts have no account opening fees, minimum balance or monthly charges. But unlike M-PESA accounts, M-KESHO accounts pay interest, do not have a limit on account balances, and are linked to limited emergency loans and insurance facilities. M-KESHO customers can be able to transact at any of the 18,000 retail outlets that accept M-PESA.
Safaricom said it plans to expand the marketing of mobile-phone based banking services, boosting access to credit and insurance products for the unbanked M-PESA users. Users of M-KESHO will be able to apply for 30-day loans of between Kes 100 ($1.24) and Kes 5000 from December this year.
While about 12 million Kenyans don’t have a bank account, over 20 million have a cell phone. Safaricom controls 78.3 percent of the mobile phone market in Kenya, and over 9.5 million of them have M-PESA accounts. One third of M-PESA accounts are held by people that are otherwise unbanked, and this is the segment that M-KESHO is targeting.
In late April, the Central bank of Kenya issued new agent banking regulations which for the first time allowed banks to engage a wide range of retail outlets for transactions handling and product promotion. This paved the way for banks to begin utilizing the M-PESA outlets as a channel.
The genius of mobile banking lies in literally putting power into Kenyans’ hands; it allows all registered mobile subscribers to open an account and enjoy the financial freedom of modern banking.
Financial access happens to be a key component of Kenya’s vision 2030. Secure savings, access to credit and affordable insurance are financial services needed by all, including low-income households that currently do not have access to banking services.
Enabling Kenyans to save without having to visit a bank is a huge step in the right direction.
This article was written by Sleeplesskenya.com contributing author Peter G. Mwangi. Peter is a business blogger and an internet activist. He is also involved in Open Source, Open Standards, Web 2.0. Peter also blogs at http://www.corporatekenya.info/
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