Sh500bn moved on mobile in first quarter

Kenyans transacted half a trillion shillings through mobile money transfer in the first three months of 2014, a record high since mobile banking was introduced seven years ago.

In the period between January and March 2014, a total of Sh544 billion was transacted using mobile phones, a 30 per cent increase from the Sh418 billion recorded in the same period in 2013.

The figure is estimated to surpass the Sh2 trillion mark this year, highlighting the growing importance of mobile banking services to financial access in Kenya.

The high usage of mobile money has pulled in banks and other independent operators, triggering cut-throat competition in the sub-sector.

Kenyans use their mobile phones to pay bills, transfer money, pay insurance premiums, borrow money, make account transfers, pay fees, make savings and purchase air time. Financial service providers also continue to leverage on mobile banking to increase accessibility and deliver services efficiently to a broad range of customers.

Financial institutions have now integrated mobile phone money services with mainstream banking services like account opening, making cash deposits, settling bills, among others, continually increasing the size of transactions.

“The mobile banking revolution that was started by M-Pesa has transformed how we conduct financial transactions. In a recent study, we found that a majority of bank customers are amenable to using mobile phones for financial transactions (58 per cent) as opposed to those that do not have bank accounts whose amenability to mobile financial transactions is at 41 per cent,” said Kenya Bankers Association chief executive Habil Olaka.
Mobile banking platforms include Kenya Commercial Bank’s M-Benki, Family Bank’s PesaMob, Commercial Bank of Africa and Safaricom’s M-Shwari, Barclays Banks’ CashSend, among others.

Safaricom is also aggressively marketing its Lipa na M-Pesa service that allows customers or merchants to make payments at points of sale for services rendered or goods purchased. The service is also poised for greater growth given the firm’s existing partnership with the Kenya Commercial Bank.

YOUTH DRIVING MOBILE MONEY

“Lipa na M-Pesa is working very well, but the partnership with KCB will lift it to a new level,” said Safaricom’s chief executive officer, Bob Collymore. 

A Consumer Insight study released on July 7 indicates that youths are among the big drivers of the mobile phone transactions, with 74 per cent of them using their mobile phones as an mobile wallet to send and receive money.

To tap the huge potential of mobile banking, Equity Bank acquired a mobile virtual network operator (MVNO) to operate mobile phone financial services. The bank plans to roll out mobile phone services using a Thin SIM that can be embedded on the normal SIM cards of existing telecommunication operators, a move that Safaricom has contested.

Safaricom has 19 million users on M-Pesa, but it has opened up the payments platform to other operators Orange, Yu and Airtel, its key competitors. Other non-telecommunication operators of mobile money services include Mobile Pay (which operates Tangaza Pesa) and MobiKash.

Safaricom commands about 70 per cent of all mobile money subscribers.

Since the launch of mobile money in 2007, Sh6.5 trillion has been transacted. Last year, the amount stood at Sh1.9 trillion, while in 2012 it was Sh1.5 trillion.

Analysts have attributed increased uptake of mobile financial services to its convenience, ease of use and security. In 2012, the figure stood at Sh1.5 trillion, outpacing growth in the transactions made through electronic payment cards.

The number of agents stood at 116,196 as at the end of March 2013.

Besides the revolutionary impact on financial systems, mobile technology has also deepened financial inclusion in Kenya by banking the previously unbanked and creating thousands of jobs.