The next big thing in banking

• You could soon apply for a loan in a supermarket and get it through your mobile phone on your way to the village

On Thursday last week, Central Bank of Kenya stepped up efforts to encourage financial institutions to open up their services to a wider reach by appointing retail stores such as supermarkets, chemists and postal outlets to conduct business on their behalf.

That comes just about two years after the industry regulator took an unprecedented step to approve mobile phone money transfer services in the country and later on mobile phone banking.

Against the opposition and risk involved CBK Governor Prof Njuguna Ndung’u’s defence was that the move was “a step towards making financial service accessible to all Kenyans.”

The success of the mobile phone money transfer services or M-money as now popularly known, has been phenomenon moving about Sh1 billion everyday.

According to the 2009 Financial Access report, produced annually by Financial Deepening Sector Kenya, mobile phone money transfer services has helped push up the number of Kenyans sending money to 52 per cent in 2009 compared to only 16.5 per cent in 2006.

And more than 26 people in every 100 are now using the service to save money, something previously not possible while one in six are using the service to store value for use while travelling.

That success is what is encouraging CBK to pull in agent banking to leverage on mobile banking to serve the unbanked, mostly the economically active poor, low-income households and small and medium sized outfits in both rural and urban areas.”

The idea being to lower the cost of providing financial services resulting from the need to put up the expensive brick and mortar branches.

“Now, with this new innovation, they do not have to; they only need to look out for the appropriate agent,” said Prof Ndung’u during the Thursday’s workshop on agent banking.

But the possibilities go beyond just making access to the unbanked. Envision this, it is 8 p.m. and you have just finished your day’s work and remember that you need to have gone to the bank to apply for a loan.

Visiting the bank the following day is not an option as you have an early morning travel out of town for an engagement that will take a week. But as you shop in your local supermarket, you notice that your bank has been ‘stocked’ among the many counters in the supermarket, your bank having appointed the retail outlet as its agency.

You fill in the application form that is passed on to your bank the following morning where it is reviewed, approved and money uploaded to your account 48 hours later.

And because your bank allows you to access your account through your mobile phone, being in a remote part of the country, you access your account and withdraw cash to your M-Pesa, Zap or yuCash money account.

Financial supermarkets

A visit to your mobile phone agent will see you access money that would have taken two weeks to access in just a a matter of days. Well invested, it means that individuals are able to make financial progress at faster pace than was possible before.