A new mobile banking product, M-Shwari, has been launched in Kenya by Safaricom Limited and Commercial Bank of Africa (CBA)
The virtual banking platform allows Safaricom subscribers to operate savings accounts, earn interest on deposits and borrow money through M-Pesa using their mobile phones.
Riding on the success of the flagship money transfer service M-Pesa, Safaricom has partnered with CBA to launch M-Shwari as a micro-loan and savings product.
Since the launch of the product in late November 2012, 645,000 subscribers have opened accounts indicating the insatiable need for banking services in the country.
On average, 40,000 new subscribers are joining daily.
It would allow customers to open and operate a M-Shwari bank account through their mobile phone, via M-PESA, without having to visit banks or fill out any forms.
Account holders would have the ability to transfer money in and out of their M-Shwari savings account to their M-PESA account at no extra charge.
It also enables account holders to have access to a loan of a minimum of US$1.2mn any time and receive your loan instantly on your M-PESA account.
"We are trying to encourage a savings culture. No economy can develop in an effective manner without a strong savings culture," said Isaac Awuondo, CBA's group managing director.
Reports have indicated that the majority of the M-Shwari subscribers are between the ages of 26-35, forming a formidable 43.5 per cent of the customer base.
"We are going beyond the brick and mortar concept of banking and enabling Kenyans to join the world of finance with a mobile phone," Awuondo said.
This technology is also expected to capture the huge market that exists in remote areas where few banks have branches and where the Safaricom network covers.
“M-Shwari will solve part of our saving problems. With no banks in our island, this new service will give us a chance to accumulate our cash and take loans for investments,” said David Otieno, a fish monger in Rusinga Island situated in Lake Victoria.
The island is covered by the Safaricom network but no bank or even a micro-finance institution has opened a branch in the island.
Other banks in Kenya are waiting to see how this new service will be received in the market.
“These are uncharted waters. No one in formal banking has been able to adequately capture this market in the under-banked and the unbanked,” observed Habil Olaka, CEO Bankers Association.
Mwangi Mumero
