Mobile Banking: The Kenyan experience Impressions and everyday practice with commercial banking services, even to remote rural communities in Kenya

History Safaricoms Mpesa in Kenya has long been the lone success story in the M-Money universe Mpesa was launched 4 years ago with the hope of enticing 100,000 users mostly in rural towns Today it has 14million plus subscribers, facilitates payments for over 1,000 businesses, has 12,000 agents and earns Safaricom nearly a third of its revenues In addition partnered with Equity Bank, I&M Bank, and Kenya Commercial Bank to offer mobile based financial products that aim to reach the unbanked Increased capacity of Mpesa in February this year by teaming with Visa on a service that allows over 13million to pay for goods bought online Also new is Nunua na M-PESA, a value-add that allows subscribers to buy goods at outlets like clothes retailer Deacons, Uchumi and Naivas Supermarkets

Market Overview With a market share of 75.9 per cent, Safaricom is the leading provider of converged communication solutions in Kenya - More than 16 million Kenyans use Safaricom to call on their mobile, to access broadband internet and to use the advanced Mobile money transfer and mobile banking service M-PESA Current mobile money market size is about 15 million users transferring Kshs. 2 billion daily – of these over 14 million are Mpesa customers Mpesa competes with Orange Money, Airtel Money and Yu Cash – who have only 500,000 users collectively Competition is set to intensify over the next 12 months as more companies enter the segment with an eye on the USD 200 billion revenue to be gained from the cash transfer service

Importance Kenyans rely heavily on their mobile phones to access financial services due to the convenience and ease the mobile phone offers. 48% of Kenyans believe mobile finance can replace banks In Kenya only 23% of the population has access to a bank account. By contrast, 14 million of our 20 million adult population use M-PESA, transacting over Sh2 billion a day Mobile money transfer and mobile banking will accelerate the development agenda - as tele-density picks pace, the potential for economic growth becomes significant

Future Cut-throat competition is expected to push tariffs to a fraction of what is presently charged, making investment almost unattractive given the related outlay and maintenance costs Safaricom keen to continue partnering with banks to offer financial products through mobile phone based bank accounts or through mobile banking services Google to partner with MasterCard, Citigroup and Verifone to offer mobile payments on phones running android operating system - Platform entails a shift from the present model that is dependent on SIM cards and making it available to all users of android powered phones A partnership between Airtel money and MasterCard to enable customers make purchases online is yet to be formally announced New products expected from Ericsson, Visa and Nokia African operator revenues from money services are set to rise to more than 5% in 2015, representing a USD3 billion opportunity