Digital shake-up: Kenyan banks take on an African mobile money behemoth

*This article was contributed to TechCabal by Seth Onyango, chicken company

“If you can’t beat them, join them” is the method conventional banks in Kenya are adopting as they search a higher slice of the mobile money market dominated by Safaricom’s M-PESA service.

Because of its widespread adoption by small companies and people in Kenya, Tanzania, Mozambique, DR Congo, Lesotho, Ghana and Egypt, M-PESA is a dominant participant within the African mobile money market.

However, conventional banks in Kenya are actually seeking to take on the market chief by rising their very own mobile money choices – both by constructing their very own platforms or by constructing on the again of current platforms, together with M-PESA itself.

This comes as a market report exhibits that the COVID-19 pandemic had a marked influence on non-cash funds to banks, with many banks rapidly enhancing their digital choices to stay aggressive.

“A massive 49% of African banks said that they had greatly increased the speed of implementation because of Covid-19,” the Backbase report reads partially.

“Some banks were already trying to transition from the traditional model before the pandemic, due to the emergence of new competition on the part of African fintech and pure digital players.”

Kenyan banks are actually seeking to leverage the arduous yards put in by the fintech innovators to rapidly and simply faucet the mobile money market, providing their prospects the comfort of conducting their common monetary transactions in addition to these normally reserved for M-Pesa and different mobile money apps, by their mobile banking apps.

The apps provide each a broader vary of monetary companies and extra management over mobile money operations.

For instance, Equity mobile, which replaces the financial institution’s EazzyBanking app, makes use of a standard service provider Till Number (a fee channel), to let subscribers select to pay a vendor from both their Equity accounts or from Pesalink, M-PESA or Airtel Money.

Settlements for transactions are real-time and retailers can entry these funds instantly, providing improved comfort. According to the financial institution, retailers usually are not charged a fee once they have the One Equity Till Number.

KCB, one among Kenya’s top-tier banks, now gives a set of mobile money companies, permitting shoppers to pay for utilities, get loans, purchase airtime, ship and obtain money, and pay college charges.

Co-operative Bank has additionally launched mobile money companies by partnering with current mobile money suppliers to stay aggressive.

But regardless of these efforts, many banks are nonetheless struggling to maintain up with the recognition and comfort of mobile money behemoth M-PESA in its present structure.

As a end result, Kenya’s banks are this 12 months seeking to enhance the attraction of PesaHyperlink, launched in 2017 as an different to M-PESA, to offer a quick, safe, and handy approach for patrons to make interbank transactions.

Exploiting M-Pesa’s shortcomings

Unlike M-PESA, which has a transaction restrict of roughly Ksh300,000 (US$2,400), prospects can transfer as much as Ksh 999,000 ($7200) between banks by PesaHyperlink, making it handy for bulk money transfers.

The squeeze on conventional banks, in the meantime, continues.

The Central Bank of Kenya (CBK) on December 31, 2022 reinstated costs on mobile money transactions, with industrial banks swiftly asserting to their prospects that mobile money transactions would value extra. The CBK had waived costs on March 16, 2020, to guard shoppers from the financial fallout of COVID-19.

To cushion the blow, some banks, comparable to Equity Bank, KCB Stanchart, Coop Bank, and Family Bank, have diminished transaction charges for conventional transactions or are selling the usage of their financial institution playing cards by promoting campaigns on YouTube and SMS platforms.

Coop and Family banks, as an illustration, have eradicated card costs to encourage prospects to make use of their debit playing cards extra and profit from future improvements.

With banks throughout Africa seeking to provide related companies, many will probably be watching the Kenyan mobile money wars, carefully.

Whichever approach this goes, nevertheless, the ultimate beneficiary is more likely to be the long-suffering African shopper.