Pipeline Publishing, Volume 7, Issue 5
This Month's Issue:
Wireless for Developing Markets
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Will Kenya’s biggest bank be Safaricom?
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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 countrywide.

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.

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