80% of Kenyan adults use M-Pesa
The M-Pesa mobile money service is broadening out to provide interest-bearing deposit accounts and micro loans in Kenya under the brand M-Shwari.
M-Shwari is a partnership between Safaricom, Vodafone, and Commercial Bank of Africa, a long standing user of Temenos systems, whose T24 R12 core banking system will support the processing of electronic loan and bank account transactions made through the M-Pesa platform.
M-Pesa is the poster-child for mobile banking services, having attracted 17 million subscribers – 80% of the adult population in Kenya – in the five years since it launched.
Across Africa, it is expected that the basic banking services currently being used will rapidly be overhauled by more sophisticated services. At the recent Sibos conference, Simon Freemantle, senior economist at Standard Bank, told a session that it is expected that 400 million deposit accounts will be opened over the next 10 years.
Safaricom customers can sign up to the M-Shwari interest bearing savings account or apply for micro loans, provided by CBA, directly through the M-Pesa menu on their phone. If successful, the loan money is sent by CBA to the customer’s M-Pesa account immediately, highlighting the convenience and simplicity of M-Shwari.
The system is connected to a Government of Kenya database to enable real-time Know Your Customer verification during customer enrolment, and uses a credit score algorithm based on their credit history as well as usage of Safaricom products, to determine a customer’s loan eligibility and maximum loan amount.
David Arnott, chief executive at Temenos, said: “Our involvement advances two of our most important corporate objectives: firstly, to be at the forefront of technology innovation in the financial services industry and, secondly, to advance technology as a means of lowering costs and making banking services more accessible. Today, there are 5 billion mobile phone subscribers compared to 2.2 billion bank account holders and so mobile banking represents a big opportunity to bank the unbanked.”