CBK warns of impending disruption to mobile-money services


Safaricom and Airtel Money are Kenya's major mobile money transfer services. Photo/COURTESY
Safaricom and Airtel Money are Kenya's major mobile money transfer services. Photo/COURTESY

In Summary

  • While the telco’s competition remains largely defined by price wars on calls and data, the involvement of the operators has helped push the financial inclusion rate to a near 90 percent rate given their high density use.
  •   According to the latest CA report, mobile money currently compose of 31.6 million subscribers and a further 223,931 agents spread across the country.
  •   The value of transactions realized through the three-month course further stands at Ksh. 2.1  trillion.

Governor to the Central Bank of Kenya (CBK) Patrick Njoroge has warned of an impending disruption to mobile-money services, this as innovation in global payment solutions takes shape.

Njoroge who spoke during the East African Euro Money Conference in Nairobi on Wednesday urged the innovators of the service to not sit in comfort equating the evolution of payment services as a long race for dominance.

“In marathon running it is called slip-streaming, we are in that stage right now. We’ve proven mobile money works to witness the adoption of the service by people who have not encountered technology before. All the initial problems and concerns on mobile money were ironed here and now the world is ready to pounce,” Njoroge told delegates.

The governor pointed to growth around the innovation of pay as we know it today, highlighting on the recently announced installation of a payment support feature on leading social-network application Whatsapp and the development of mobile-pay solutions by Apple and Samsung.

While mobile-money whose cradle lies in the country remains on a pedestal at this time, the fears aroused by the lender of last resort have empirical evidence in the recent disruption to traditional banking.

Digital lending through an algorithm risk-based pricing model has in recent years turned commercial lending on its head to the leave the majority of aged financial services in awe.

While the digital lenders have had their moment in the limelight, commercial banks have slowly grown to mimick the new kid on the block, harnessing the disruption in their evolution of strategy.

The majority of banks whose number currently stands at over 40 now have tailor made digital solutions for their clientele base.

Disruption in banking has further had a hand in collaboration within the sector with five commercial banks to include the Commercial Bank of Africa (CBA), KCB, NIC, Diamond Trust Bank and the Cooperative Bank being the most recent front for the sector to launch Stawi an innovative solution to funding to micro, small and medium enterprises (MSMEs).

CBK Governor has from the observation warned telco operators against on-boarding knock-out competitive tactics to lobby for an ease in collaborative ventures under the cloud of evolution.

“I call it the Eliud Kipchoge approach to competition, when he runs; he actually goes along with the competition encouraging them to keep up. There is no sense of knocking over the competition to win. This is what i would encourage,” he added.

While the telco’s competition remains largely defined by price wars on calls and data, the involvement of the operators has helped push the financial inclusion rate to a near 90 percent rate given their high density use.

According to the latest Communications Authority (CA) report covering the period between October and December 31st 2018, mobile money currently compose of 31.6 million subscribers and a further 223,931 agents spread across the country.

The value of transactions realized through the three-month course further stands at Ksh. 2.1  trillion.

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Story By Kepha Muiruri
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