In Kenya, M-PESA, the mobile money transfer service established in 2007 by Safaricom, is regarded as the first truly successful mobile money service in the world. M-PESA is accredited with introducing financial services to low-income and unemployed persons across the country, unlocking economic opportunities for millions.
However, before M-PESA, the Kenyan banking and finance sector was already trying new ideas to improve a rigid financial system to accommodate a changing population.
1982 – Barclays Bank of Kenya was the first bank to fully computerize its operations in the country
1990s – Clearing and processing of bank cheques took an average of 21 days – By comparison, it now takes 2 days to clear cheques
1989 – Standard Chartered introduced the first ATM in Kenya
2009 – The first agency banking model was introduced by Co-op Bank
2010 – First mobile banking platform launched by Family Bank
In this post, we look at how the financial system of old resulted in the massive success of the M-PESA mobile money service in Kenya.
1985: Mobile Banking with Standard Chartered Bank
Possibly the first version of mobile banking in Kenya
In 1980, Standard Chartered bank offered mobile banking as shown in the picture below
2004: Mobile Banking with Co-operative Bank(Co-op Bank)
In 2004, Co-op Bank of Kenya launched its mobile banking service
The service used vehicles to go to customers
Co-op Bank allowed customers to check their account balance, request statements, and track the status of cheques
The service did not facilitate actual transfer of money
2016: PesaLink by the Kenya Bankers Association (KBA)
In 2016, the Kenya Bankers Association (KBA) launched Pesalink, a service that lets customers transfer money across banks
The service established interoperability for local commecial banks
Allows customers to send money from one bank account to another bank account in real time on all banks’ retail payment channels including mobile, ATM, Internet banking, Agency, Bank branches and POS
PesaLink provides a 24-7-365-day platform enabling customers to send money from as low as KSh. 10 ($0.1) to as much as KSh. 999,999 ($10, 000) almost instantly across banks at a very low fee
2018: PesaPap by Family Bank
PesaPap lets users access banking services on their mobile phone
Competitors would soon collaborate with Safaricom’s M-PESA to introduce the KCB M-PESA and the Safaricom Mshwari services
Post-Covid innovations within the Kenyan mobile money and banking landscape have revealed an increasing focus on blended finance and the use of moveable assets registry to address credit access to vulnerable sectors.