Digital financial products re-define service delivery

Tuesday October 3 2017

Airtel Kenya CEO, Prasanta Das Sarma speaks during launch of tubonge that targets Kenyans from all walks of life. The firm says it is upgrading the Airtel Money system and increasing the active agent base to 22,000 from the current 10,000. PHOTO | FILE

Airtel Kenya CEO, Prasanta Das Sarma speaks during launch of tubonge that targets Kenyans from all walks of life. The firm says it is upgrading the Airtel Money system and increasing the active agent base to 22,000 from the current 10,000. PHOTO | FILE 

By JAMES NGUNJIRI
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Collaboration between microfinance banks and telcos in rolling out products and services that boost financing of micro small and medium Enterprises (MSMEs) is imminent, financial sector players say.

Microfinanciers are being considered to have an important role to play in financing MSMEs that will power Kenya’s take off and improve the quality of lives through creation of goods and employment.

There are about 13 microfinance banks, which are licensed by the Central Bank of Kenya (CBK).

Considering the trends of mobile phone penetration in Kenya, the market is expecting more exciting products to hit the market soon.

Mobile money explosion boosted by cheaper connectivity and conducive regulatory environment will spur more innovation in the sector and enhance financial inclusivity.

The Kenya Bankers Association (KBA) says the financial industry has an outstanding record of identifying and introducing new innovations that have improved efficiency, lowered cost, made life easier for customers and opened new opportunities for growth.

“Businesses especially MSMEs continue to decry lack of credit to fuel their growth engines. And where credit is available, it may not be affordable to the MSMEs,” said KBA chief executive Habil Olaka, last week during the launch of M-Fanisi, a savings and loan product by Maisha Microfinance Bank (MFB) in partnership with Airtel.

Maisha MFB became the first telco-backed microfinance to launch a savings and mobile money solution in the market and the fourth financial institution, alongside banks such as Commercial Bank of Africa (CBA), Kenya Commercial Bank (KCB) and Equity.

“Digital financial services have re-defined service delivery within the sector, offering even greater access to mainstream banking services, especially to the under banked. We are pleased with Maisha Microfinance Bank’s aggressive innovation strategy which leverages Africa’s most utilised technology, the mobile handset, to provide a platform that not only extends financial services but also enhances a savings culture within our population,” said Mr Olaka.

DIVERSIFY TRADITIONAL MODELS

According to the bankers’ lobby, the need for financial institutions to reach out and diversify from the traditional models of operation towards technology driven service provision is now imminent.

A gradual shift in consumer attitude and growing demand for any-time anywhere access to services has characterised the banking sector in the recent past.

Data from the Central Bank of Kenya shows that MFBs sunk into a collective Sh377 million loss in the year ended December 2016 from a Sh549 million pre-tax profit in 2015.

MFBs, which are shielded from the interest rate capping law have been struggling to secure funds for investments.

In Kenya, the patent influence of mobile technology, the evolution of mobile solutions, as well as the upsurge of new technology in commerce has transformed the banking industry.

M-Shwari was the first mobile based loans and savings product an innovation by KBA’s member CBA and Safaricom.

Since its launch, several other banks have invested billions of shillings in products that have transformed how consumers and businesses interact.

“The industry has benefited greatly from progressive regulator - CBK, which has been supporting development of numerous alternative products such as mobile wallets and bank agents that have eased access and provided link services that improve the lives of millions of Kenyans,” said Mr Olaka.

PESALINK

KBA recently introduced PesaLink, an interbank real time money transfer service. The service launched in February, has already reached more than three million customers who have moved over Sh18 billion.

Airtel Kenya managing director Prasanta Das Sarma said the telco is enhancing its customer reach and satisfaction through upgrading the Airtel Money system and increasing the active agent base to 22,000 from 10,000.

“All these developments, including real time payments processing services across multiple access channels have played a key role in ensuring seamless transactions for all our customers,” said Mr Sarma.

Other mobile money platforms are Telkom Money, Equity Group’s Equitel, Tangaza and MobiKash.