# CONSPIRACY: MOBILE BANKING TO TAKEOVER BANKING SECTOR

source: www.pexels.com

Mobile banking has picked up it pace in Africa and this has caught the attention of many international bodies. The use of mobile phones has enabled small income households to be able to bank easily. This is what has brought so much attention on mobile banking in Africa. Banks have tried for years and years to tap into small income households and small scale businesses because this is where the numbers are. Kenya is the leading country in mobile banking Africa. Many studies have been conducted to establish the success of M-pesa so that other countries can mimic the same. Time has proven that mobile banking is a thing for African countries only. Its success cannot be attributed to good business ideas only. Success is a result of integrating the African culture and challenges into the mobile banking services. This is the main reason why the banking topography in Africa may change sooner than in developing countries. 

Why mobile banking works in Africa?

Everyone knows the infrastructure of Africa isn’t the best in the world but for some reason we are still expected to travel for hours to access financial services. Mobile banking allows various transactions to be done at the comfort of your village. You can deposit daily at the nearest agent which is usually the nearest shopping center. Shopping centers are roughly 5km apart in the remote areas making it a 2.5km walk for most Africans. This eliminates any transport cost incurred to go to the nearest towns. Once the deposit is done, the money can be used to pay bills, buy airtime or mobile data and it can be transferred to another registered mobile banking user. All this is achieved without the use of the internet.

Mobile service providers have taken the mobile banking services a step further with FinTech companies to link bank accounts to mobile lines. This means you can perform a variety of tasks on your bank accounts at the comfort of your home. 

How will mobile banking eliminate banks?

There is a big conspiracy theory to eliminate banks in Africa starting with Eastern Africa. The servers for M-pesa are currently housed in Kenya. There are also hints of a power struggle with Safaricom trying to break free from Vodafone. Coupled with the resent expansions of M-pesa capacity and services to other African counties it is safe to assume that banks will take a huge hit very soon. All this paired with how taxation was increased on bank commissions in Kenya and the capping of interest rates in 2016; banks in Kenya are struggling to make reasonable profits. The environmental conditions are not suitable for banks but they are very lucrative for mobile credit services like Mshwari which is a facility by CBA Kenya. CBA is currently diversifying their credit services to be accessed by phone more easily. It is very rare to find a queue inside their banking halls. 

In general, it may not seem like much but a closer look poses important question as to the end goal of the strict requirements that banks need to meet. The only bank that seems to be doing extremely well is KCB Ltd which also established in several countries in Eastern Africa. KCB disburses loans and collects savings in tunes on billions of Kenya shillings every month. It is by far the most stable financial entity in Kenya reaping the benefits of mainstream and mobile banking at the same time. The mobile banking sect in KCB is known as KCB-MPESA with a facilitation fee of 2%-4% per month depending on Amount and repayment period. This is very low as the market average 6%-7.5% per month but a very lucrative source of income for the bank.

 

Source: www.pexels.com

The Conspiracy

In the recent years there has been serious competition from the mobile banking sector to the banks. The banks have a very high cost of maintenance compared to the income they make. On the other hand mobile banking requires very little upkeep. They can be accessed using a SIM card toolkit or a USSD code. CBA (Commercial Bank of Africa) noticed the potential and moved to form a partnership with Safaricom that included a non-compete clause. The clause gave CBA an opportunity to introduce a new product, M-swari and be the only mobile banking service provider. After the non-compete clause elapsed Safaricom partnered with KCB to provide KCB-MPESA loans. The partnership completed the circle of three major players in Kenya who had the muscle to provide mobile banking services. These services include savings, target savings, fixed deposits, funds transfer both locally and internationally and lending services.  

CBA and KCB have enough saving, great financial systems and the know-how of mobile banking. With M-PESA acting as a facilitating application, they can lend money anywhere to anyone who has a phone and the right SIM card. The CRB services act as a good way to ensure defaulters are not getting funds anywhere else until they settle their defaulted loans. 

CBA, KCB and Safaricom can bring down the whole banking sector in Africa with a few strategic partnership here and there in countries all over Africa. They basically make the use of Paypal and Western Union obsolete in Eastern Africa. Some online platforms like Upwork have have embrace mobile banking and have  the infrastructure that allows freelancers to get money straight to their MPESA accounts. The best part is that the revolution will start in Kenya.