Kenya : Mobile phones to serve as credit cards

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Kenya’s Central Bank Governor Njuguna Ndung’u has welcomed the launch of the country’s first formal mobile banking services unveiled Thursday to target millions of mobile phone users who lack access to bank accounts.

Equity Bank, rated Kenya’s fastest-growing bank and the single largest in terms of new bank accounts, launched its mobile phone banking services with a pledge to license local shopkeepers to also begin to offer payment solutions, easing transaction costs.

It is expected that soon, Kenyans with bank accounts will begin to use their mobile phones to pay for their cost of shopping, provided they have funds in the bank accounts.

The launch of the mobile phone banking services is intended to allow customers the flexibility to transact business using their mobile phones, the same way an automated teller machine (ATM) operates, at a much lower transactional cost.

“This is a revolutionary mobile that delivers mobility, convenience and security to the bank’s existing as well as prospective customers,” Ndung’u said during the formal launch of the services. “It will leverage on the strong mobile penetration locally and globally,” he said.

Kenya’s existing financial institutions, which consists of more than 50 banks, more than a dozen stock brokerage houses and several insurance firms, have not attracted more than 4.5 million customers, which suggests that most people still remain outside the banks.

There are more than 11 million Kenyans, out of a population of 36 million, who own mobile phones, but the low number of bank account holders is something that bankers attribute to the high cost of using the banks for transactions.

“We are trying to make this facility as affordable as possible. This is to make banking as affordable as possible, that is why we are giving out free bank accounts,” said James Mwangi, Equity Bank Chief Executive Officer.

The mobile banking service offers customers conventional services, allowing clients to check their account balances, make cash transfers to customers within the same bank, make requests for account statements and block lost or stolen ATM cards.

Clients could also buy airtime from the bank accounts, a service that is currently offered by most of the commercial banks as well as offering an opportunity to customers to pay for various bills, including water, electricity and laundry services.

Nwangi said: “The mobile phone boom has laid down a strong base for low-cost banking. The growth of mobile solutions in rural Kenya and regionally shows that a well designed service can go a long way in encouraging not only the under-banked but the under-served customers.”

Mwangi said the new mobile banking service would help to reduce overcrowding of the banking halls and was designed to be much cheaper compared to going to a bank branch.

It will save institutions precious time spent in banking halls, he added.

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