Kenyans transacted Sh1.5 trillion through their mobile phones in the first 10 months of this year, underscoring the increasing significance of handsets in the financial services sector.
Data from the Central Bank of Kenya (CBK) shows that Kenyans made deals worth Sh1.5 trillion, nearly the size of this year’s national budget in the period between January and October 2013, defying the 10 per cent tax levied on mobile money.
The amount is 22 per cent higher than the Sh1.2 trillion transacted over mobile phones in the same period last year.
“The growth is a result of mobile payments moving downstream; away from just sending and receiving money. Now, people are not just making transfers alone but also making payments for goods and services over their phones,” said Danson Muchemi, the chief executive officer of JamboPay, an electronic payments company.
As a result, commercial banks and other financial institutions are increasingly adopting platforms where their customers can use mobile phones and electronic cards to make payments as they seek to put in place fresh revenue streams and also make it more convenient for clients to transact.
According to CBK’s governor Prof Njuguna Ndung’u the advent of mobile money has broadened channels of delivering financial services to more people conveniently.
“Most telling is that the use of MFS (mobile financial services) has doubled from 28 per cent in 2009 to 62 per cent in 2013 implying a direct contribution of increased use of MFS to the increased access to financial services,” Prof Njuguna noted last week during the launch of Family Bank’s mobile money banking service — Pesa Mob.
A recent survey by FinAccess indicates that mobile phone financial services have helped in widening financial inclusion, with the proportion of adults roped into the formal banking system rising to 66.7 per cent in 2013 from 27.4 per cent recorded in 2006.
“The demographics in the banking industry have changed. People are now increasingly finding it convenient to transact via their mobile phones and over the Internet at their own convenience,” said Collins Otiwu, Kenya Commercial Bank’s chief financial officer in an interview.
The bank launched the M-Benki product a few months ago as it seeks to increase customer transactions over the mobile phone.
Safaricom in partnership with Commercial Bank of Africa on the other hand launched M-Shwari last year, a service that allows customers to deposit money in an account and also to borrow loans.
The platform now has attracted over 2 million customers with deposits rising to over Sh20 billion as of September this year.
Barclays Bank of Kenya is also pursuing a technology platform to increase efficiency, cut costs and generate additional revenue.
“I hardly use branches. I can make my payments through my phone, I can pay salaries through my phone and I can transfer money through the phone,” Barclays Bank’s chief executive officer Jeremy Awori also said in a recent interview.
The bank also launched the bulk M-Pesa transaction system to enable payments of up to 50,000 workers via the Internet banking platform.