Kenyan banks struggle to break Safaricom’s mobile banking space monopoly
A lack of specific financial regulations governing telecommunication operators has contributed to m-Pesa’s explosive growth. January 29, 2013 | ResearchIn Kenya, mobile banking has exploded in growth since the roll-out of m-Pesa in March 2007. The creation of m-Pesa was significant in that it was hatched not from the banking industry but between telecommunication firms Safaricom and Vodafone. With just a mobile phone and a registration with Safaricom, Kenya’s mobile service giant, you can pay for anything within seconds, allowing anyone with access to a mobile phone to carry out small value electronic payments. More recently Safaricom, in collaboration with Commercial Bank of Africa, launched the next evolution in mobile banking – customers can now save money, borrow loans and even earn interests through use of mobile phones. This eliminates the need to go through intermediaries such as banks or even possess a bank account. Obviously, local banks are not happy about it. Within five years, m-Pesa has become the largest and most dominant mobile payment form in Kenya, boasting more than 19 million subscribers. m-Pesa’s success has seen it become the dominant financial services provider, leaving banks scrambling to compete. One of the key factors driving the m-Pesa’s growth is the regulatory environment, or rather, the lack of it, in Kenya. The absence of a formal financial regulatory framework for telecommunication operators has contributed to the mobile banking boom in Kenya. Many banks have launched their own competing platforms, with some, if not little success. Unlike in Kenya, telecommunication companies elsewhere are not allowed to enter financial services industry as a stand-alone player, especially in Asia. Safaricom’s M-Shwari service transforms mobile banking into a full-fledged branch Figure 1. Reaching the masses through M-Shwari This was not the case in Kenya. The unique business model of m-Pesa, which is not governed by formal banking regulations... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Mobile Banking, Retail Banking, Retail PaymentsMobile banking,retail,Retail Payments, Mobile Banking,Retail Banking,Retail Payments, Keywords:M-Pesa, P2P Payments, Safaricom, Vodafone, M-Shwari, E-float, John Staley, Equity Bank m-Pesa, P2P Payments, Safaricom, Vodafone, M-Shwari, e-float, John Staley, Equity Bank
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