Reasons Why Kenya Leads In Mobile Banking

Nowadays, it is hard to find a Kenyan adult who is not already subscribed to M-pesa or at the very least, familiar with the ins and outs of this particular mobile banking service; a service run by Vodacom and Safaricom.

More than forty percent of Kenya’s gross domestic product flows through M-pesa, making it a force to be reckoned with. According to the Communication Authority of Kenya, mobile money users have now increased to 28.7 million, demonstrating a 3% growth from the preceding quarter where mobile money users stood at 27.7 million.

The giant mobile banking service M-pesa excels for a variety of reasons but mainly because of the sense of ease and safety it exudes both practically and psychologically. M-pesa has become a safety net for most people and the signature green associated with M-pesa acts as a beacon of hope for all those in financial need, whatever the purpose may be.

Means of transactions have grown easier and easier lighter over the years; from gold to bitcoin. However, regardless of this, the actaul necessity of conducting transactions has remained constant. Therefore it is only natural that any system; banking, mobile, or otherwise, that can make transaction processes easier and more efficient is bound for success. This is one of the many reasons why M-pesa leads its “birth-country” Kenya, ahead of the rest of Africa in the mobile banking sector.

A significantly large portion of the adult population in Kenya relies on banking through M-pesa, which could explain the boom that has been experienced in the Kenyan mobile phone industry. Innovations such as these have caused an increase in phone sales like never before, with more and more Kenyans, even in rural regions, understanding the importance of mobile phones and embracing them. (Read more on the mobile phone market in Kenya)

Accessibility has done nothing but contribute to the success of M-pesa. With over 90 000 outlets nationwide, this service is not hard to find. This strategy ensures that the mobile banking service stays relevant in consumers’ minds, making it second nature to choose M-pesa over normal banking institutions. Consumers are reminded that there are no queues, no delayed reflection periods when conducting deposits, and especially no tedious paperwork.

The launch of ‘Lipa na M-pesa’ has seen businesses grow with approximately 25 00 active merchants. This service allows consumers to make payments to businesses for commodities or services via M-pesa, essentially making the process of having to withdraw money unnecessary. Hence, safer, faster, easier,and more convenient purchasing.

Another type of service that has joined the mobile banking sector is microfinance. Also referred to as microcredit. This service provides individuals with a means to save money; borrow money, and insure themselves against various adverse events. The Commercial Bank of Africa and Safaricom partnered up to bring Kenyans, M-shwari.

M-shwari offers a blend of savings and loan accounts that can only be accessed through M-pesa, thus keeping it in the family, so to speak. So, M-pesa subscribers are offered more banking options right on their mobile devices. With an M-shwari savings account, one can earn interest on all their deposits as well as the benefit of the protection afforded by insurance on deposits made, up to a specified limit. This service allows easy access to personal and microfinance loans without a need for a previous banking history. Such terms are almost never seen in regular financial institutions. Over half of M-shwari customers do not have bank account and about a third of all M-pesa users also use M-shwari, displaying the changes the mobile banking sector is influencing nationwide.

Kenya has fully welcomed mobile banking services, regardless of which network provides them. M-pesa is evidently the most prominent of the lot but let us not forget that it is not a monopoly. Equitel, another mobile banking service, is run by a subsidiary of Equity Group Holdings Limited called FinServe Africa Limited. Equitel gives customers access to both telecommunications and banking services. The service, which currently has a little over 1 million registered users, has recently joined the mobile banking sector and is sure to achieve more success as time goes by.

Other companies have added their own brand of mobile banking services to the sector, such as;

• MobiKash (MobiKash Africa Limited)

• Orange Money (Telkom Kenya)

• B-Mobile (Bank of Africa)

• Airtel Money (Airtel Africa)

• Tangaza Money (Mobile Pay Limited).

Financial institutions all around Kenya also offer mobile banking services in addition to their regular products, e.g. “MCo-op Cash” by the Co-operative Bank of Kenya or “Mobi Bank” by Kenya Commercial Bank.

Mobile banking is a marketing strategy that attracts consumers almost instantly in Kenya. It is fast and takes very little time, which is not a hard sell to a consumer, especially those in the rural areas who may not be physically able access their banks instantly. However, mobile banking has not completely taken over the banking sector; there are still some transactions that can only be carried out in a bank or other financial institution. Additionally, there are more options available through online banking than there are for mobile banking. As for the future, Kenya is likely to continue to lead in mobile money the more this system integrates itself into the population.

The grip the online and mobile banking sector has on the Kenyan economy only goes to show that Kenyans can expect more innovations and even more user friendly and affordable services in the future.

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