M-Kesho: Convergence of mobile telephony and banking
And if the latest industry trends are anything to go by, Kenya rightfully
deserves the accolades as the leading mobile financial services innovator. The
latest mobile commerce innovation comes in the partnership of Equity Bank,
Kenya’s largest bank by customer base, and Safaricom, Kenya’s largest mobile
company and the most profitable company in East and Central Africa. M-Kesho, an
innovative bank account that can be accessed via the mobile phone, is the
product of this partnership.
The new M-Kesho service is a value addition to the existing M-Pesa application
in that it not only allows M-Pesa subscribers access their Equity Bank accounts,
but also encompasses M-Pesa subscribers who do not have bank accounts. And what
is more is the fact that subscribers have access to other banking services and
products such as access to loans.
The new M-Kesho service is a boon, especially for the rural folks who own mobile phones, but lack a bank account.
convenient bank account where
customers can save and earn interest,
access financial services like insurance
and emergency credit.”
According to the National Financial Access Survey conducted last year, Kenya has
only 32 per cent of its bankable population enjoying formal and informal banking
services. This means that a sizeable chunk of Kenyans were not enjoying banking
services. This is in stark contrast to the millions of Kenyans who own a mobile
phone and operate an M-Pesa account. According to the Communications Commission
of Kenya, Kenya has more than 19 million people owning a mobile phone,
representing 49.7 per cent of the population, while about 12 million people have
an M-Pesa account.
According to Dr. James Mwangi, Equity Bank’s CEO, the new M-Kesho service is a
boon, especially for the rural folks who own mobile phones, but lack a bank
account. The service, notes Mwangi, will allow users to deposit as little as 100
Kes ($1.25 US) in their accounts and easily send and withdraw money from their
mobile phone accounts from any of the more than 20,000 M-Pesa agents
What is even more attractive about this new mobile banking technology is the
fact that the accounts do not attract any monthly charges nor have a minimum
operating balance. And like a normal bank account, the cash deposited into the
account will earn an annual interest depending on the amount deposited.
Michael Joseph, the outgoing Safaricom CEO says the new service will go a long
way into instilling a saving culture amongst Kenyans, especially the ones that
do not operate a bank account because of the ease of transactions and lack of
bank charges and minimum operating balance.
Says he: “We developed this product
based on a need for an affordable and
Says Dr. Mwangi: “M-Kesho from Safaricom and Equity Bank will propel financial
services provision in Kenya to the last mile. When all the M-Pesa accounts are
finally changed into bank accounts, Kenya will top the list of the most banked
developing country in the world. We are currently signing up an estimated 8,000
accounts per day, arguably the largest number of customers we have handled in
the history of the bank.”
The phenomenal growth in mobile banking is not only being experienced in Kenya
alone, as other African nations jump onto the bandwagon.
In South Africa, Vodacom, the largest mobile communications company in the
southern African nation has recently introduced M-Pesa to its subscribers. The
model is similar to the one currently offered by Safaricom in Kenya. According
to Vodacom, the new service is offered in partnership with Nedbank and is mainly
targeting the more than 13 million unbanked South Africans. Vodacom is also
offering the M-Pesa service in Tanzania.