Kenya's Safaricom revamps mobile phone banking with CBA

NAIROBI (Reuters) - Kenya's top telecoms operator, Safaricom, will offer a new mobile phone-based banking product with Commercial Bank of Africa (CBA) to tap into an underdeveloped market for financial services.

The firm, which is 40 percent owned by Britain's Vodafone, has been looking to build on the success of its phone-based money transfer service, M-Pesa.

Started in 2007 as the world's first mobile-phone based service for moving money around, M-Pesa has grown to account for a sixth of Safaricom's revenue or 10.43 billion shillings in the firm's first-half ended September .

It has also given the east African nation of 40 million people a reputation as a pioneer in financial innovation.

Known as M-Shwari, the new service will allow Safaricom's subscribers to save money and access short-term credit from CBA.

Although the country has seen an increase in the population's access to financial services in recent years, about a third of the population still lacks access, the central bank says.

Total deposit accounts in the financial sector leapt to 15 million at the end of September this year from 2.5 million in 2005, the central bank said, but many poor people especially in rural areas still keep their cash in mattresses at home.

"Research indicates that a staggering 200 billion shillings remains unbanked, not earning interest and not generating much value to their owners," said Bob Collymore, Safaricom's chief executive.

He said that M-Shwari "will foster a culture of saving."

Unlike a previous attempt to offer a similar service with Equity Bank, users of M-Shwari will not be required to directly open a bank account with CBA.

Known as M-Kesho, the previous service required users to also open an account with Equity Bank, to access banking services on their mobile phones.

M-Shwari users will save money at an annualised deposit interest rate of up to 5 percent and allows them to borrow amounts of up to 20,000 shillings for up to 30 days at a one-time interest rate of 7.5 percent, both firms said.

"With this mobile banking product we will leverage on Safaricom's customer base of over 19.2 million subscribers - 15 million of whom are already on M-Pesa," said Isaac Awuondo, CBA's managing director.

Source: http://news.yahoo.com/kenyas-safaricom-revamps-mobile-phone-banking-cba-051730651--sector.html

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