Mobile banking hots up as Co-op enters fray

Cooperative Bank of Kenya has become the latest lender to introduce a mobile-based banking platform.

Known as M-Co-op Cash, the bank hoped to increase micro-deposits and micro-loans while decongesting banking halls.

Customers can apply for loans, make deposits and pay utility bills with their cell-phone numbers acting as the account number.

“This will ride on our 4.6 million direct customers and the over 10 million Kenyans in the Co-operative movement that is the largest in Africa,” said managing director Gideon Muriuki (right) in a statement.

It joins a growing list of lenders who have opted to use technology to increase their reach as opposed to the traditional brick-and-motar which is expensive in comparison.

WITNESS SURGE

Since the launch of M-Shwari between Safaricom and Commercial Bank of Africa in which customers earn interest on deposits and access micro-loans, banking has witnessed a surge in similar services.

Banks are rapidly upgrading their information technology to retain and attract customers.

M-Shwari has since elevated CBA among the largest retail banks on the basis of deposit accounts.

By June, it had as overtaken rival, Equity Bank, as the lender with the highest number of loan accounts.

On its part, Kenya Commercial Bank has M-benki, which allows customers to open a bank account under Safaricom’s M-Pesa without physically visiting a branch.

Barclays Bank of Kenya also struck a deal with Safaricom allowing bulk payments from the lender to M-Pesa accounts in a transfer that bypasses rivals. Micro-lender Family Bank on its part uses Safaricom’s M-Pesa to create a fully branchless electronic bank by linking all its savings and current account holders to Safaricom’s M-Pesa.

NIC Bank on the other hand launched a banking app, NIC Now, which enables customers to access bank accounts at the palm of their hands using a smartphone.

Cooperative Bank’s service, however, works across any mobile network, which may give it access to an even wider customer pool.

M-Co-op Cash will be offering mobile-based credit and salary advances that attract a one-off fee of seven per cent which is repayable within a month.

Business loans are charged a 10 per cent fee. With business loans ranging between Sh5,000 and Sh50,000, there is no doubt the bank has an eye on increasing returns from non-funded income.

Personal loans will range from Sh100 to Sh2,000.
The Kenyan society is rapidly transforming into a cashless one, and technology is no doubt the new frontier for commercial banks.

It is perhaps for this reason that banks remain the most profitable entities regardless of the economic climate.

For instance, Cooperative Bank had a 39 per cent growth in non-funded income to Sh6.2 billion in 2014 from Sh4.5 billion in the half year to June 2013.