Airtight systems protect Safaricom from money launderers

How does it feel to preside over a company that has had such a major impact on Kenyans?

It is an immense responsibility that we do not take lightly. The success of M-Pesa is fundamentally tied to the Kenyan spirit of sharing and providing for others. This is what inspired the service in its early days. Now M-Pesa has shifted from being a mobile money transfer service to a platform that is powering an increasing number of transactions in the country across numerous industries.

No one could have imagined that M-Pesa would lift over 190,000 people out of abject poverty when it started 10 years ago, as a study by Massachusetts Institute of Technology professors recently established.

No one could have predicted that the service would empower over 117,000 small businesses with alternative revenue streams.

We never believed that M-Pesa would grow so big so fast, but it’s growth reveals that it met an unfulfilled need – one that continues to evolve as it grows.

For instance, when we started the service, we had no idea that partnerships with CBA or KCB would enable six loans to be processed every second.

We have seen M-Pesa enable Kenyans to access health services through partnerships with M-Tiba.

Over 450,000 M-Pesa users across East Africa can now access solar power through our partnership with M-Kopa. As a result, 92 per cent of the users now report that M-Kopa Solar has improved their children’s ability to study.

A similar percentage also report that they also now felt safer at night, with their solar system reducing the risk of household fires and severe burning injuries – usually associated with fuel-based lighting.

What else can you ask for?

We often get asked whether we are doing enough – the question we ask ourselves every day is how can we use this network to meet a need for Kenyans.

And that has driven the continued growth of M-Pesa.

M-Pesa use here has become ubiquitous, something taken for granted because it is such an integral part of peoples’ lives. Yet it has not quite picked up in markets such as South Africa. What is the problem?

M-Pesa met, and continues to meet a unique need for Kenyans – they needed a safe and secure way to transfer money to relatives, friends or even for business purposes. This offered a distinct platform for M-Pesa to grow initially as a uniquely Kenyan product.

In other markets, the same market conditions or needs may not exist. For me, identifying what that need is what will extend M-Pesa to other markets.

In some markets like South Africa, the increased access that customers have to formal banking services may have played a part in the service not being adopted as widely as in Kenya.

There are those who say that given the huge profits Safaricom is making – Sh38.1 billion in the year ending March 2016 – it can surely afford to reduce transaction charges considerably. What do you say to that?

Late last year we removed transactions costs for amounts below Sh100. This will push more payments for smaller amounts, which make up the bulk of the transactions on the system.

Since we removed the transaction fee, the number of transactions in this segment has doubled, which is in itself phenomenal.

A recent study by KPMG found that M-Pesa saves the average customer about Sh10,000 a year as a result of having the service accessible on their mobile phone.

We continuously pass on any cost savings to our customers where we can, keeping in mind that building a secure system that can manage 900 transactions a second and extending our agency network takes continuous and heavy investments.

Banks are introducing their own mobile payment platform that will allow more convenient transfers between accounts in different banks. Don’t you fear that this could eat into your market share?

Not at all – we see this as a benefit for Kenyans who can now enjoy more services through the mobile phone. We partner with more than 40 banks and financial institutions who have used M-Pesa to extend more services to their customers on our platform.

There is significant market opportunity for us all – despite the fact that M-Pesa is the biggest service of its kind in the world; nine out of 10 payments in Kenya are still made in cash.

In a recent report, the US State Department says that M-Pesa is vulnerable to money laundering. How water tight is M-Pesa?

M-Pesa is fully regulated by law, meeting stringent global financial services standards on Anti-Money Laundering. It is subject to Central Bank oversight and we are audited by external and international bodies on Anti-Money Laundering.

We are a reporting institution under the Proceeds of Crime and Money Laundering (Amendment) Act, 2012 and we file our reports with the Financial Reporting Centre in Kenya.

Every customer using M-Pesa is required to register and each transaction can be tracked and traced via an individual transaction number.

Our robust identification and screening controls are similar to those in any other financial institution; including customer registration, agent due diligence, suspicious activity reporting procedures and sanction and politically exposed person screening.

How is Safaricom cushioning itself against disruptive technology that has in recent years been top killing brands?

We do not cushion ourselves against disruptive technology. We look out for it and see how to embrace it with the aim of making our customer experience much better.
Sometimes, we even disrupt ourselves. The world is changing at lightning speed, and this is why we often say our competition is no longer local – it is increasingly global.

What is the one thing that Keeps Bob Collymore awake?

Our customers. I want to develop services that will enable them to do more at home, work and play. How can we provide a solution to their most pressing need using mobile?