Bankers see rise of mo­bile pay and agency busi­ness

KBA links the move to chang­ing cus­tomer trends and rate-cap­ping law

Business Daily (Kenya) - - MONEY & MARKETS - James Ngun­jiri Ngun­jirij@ke.na­tion­media.com

Banks are likely to keep shift­ing their busi­ness to agency bank­ing and mo­bile pay­ments as they adapt to a new way of do­ing busi­ness in the wake of tougher leg­is­la­tion and shift­ing cus­tomer habits, an in­dus­try lobby has said.

Kenya­bankers As­so­ci­a­tion (KBA) chief ex­ec­u­tive Ha­bil Olaka, speak­ing on NTV yes­ter­day, said the in­dus­try is also head­ing to a sce­nario where more pay­ments will be made in

real time, with cus­tomers no longer will­ing to wait for days for their pay­ments to be pro­cessed. “We can’t dis­count the role that M-pesa has played in fa­cil­i­tat­ing banks to be able to ride onto the mo­bile bank­ing wave. From where I sit, we are go­ing to have more of that,” said Mr Olaka.

Lenders have moved to­wards al­ter­na­tive bank­ing chan­nels as they look to cut costs in or­der to

pro­tect their bot­tom lines in the wake of the rate cap law which came into force in Au­gust 2016. Banks’ in­ter­est in­come from cus­tomer loans fell by Sh26 bil­lion in the first six months of this year to Sh140 bil­lion, in­di­cat­ing a need for the lenders to di­ver­sify their in­come streams in the face of a chang­ing mar­ket.

Last month, Eq­uity Bank, Kenya’s big­gest lender by cus­tomers, said it was clos­ing some of its au­to­mated teller machines (ATMS) as it shifts to agency and mo­bile bank­ing in a fresh cost-cut­ting strat­egy.

“The en­tire bank­ing com­mu­nity is volatile, and there­fore it is in­evitable that there will be a change in the way banks op­er­ate,” said Pa­trick Obath, a di­rec­tor in the Kenya chap­ter of the In­ter­na­tional Cham­ber of Com­merce.

Banks have also looked to claim a larger slice of the mo­bile money pay­ments space. In Fe­bru­ary, KBA launched an in­ter­bank money trans­fer plat­form, Pe­salink, which by early Au­gust had trans­acted about Sh8 bil­lion.

“Pe­salink is a prod­uct that came into the mar­ket to fa­cil­i­tate banks to be able to trans­fer in real time money from ac­count-toac­count and per­son-to-per­son. I can see that prod­uct evolve to in­clude per­son-to-busi­ness, per­son-to-gov­ern­ment and in real time,” said Mr Olaka.

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