Kenya continues to lead the way

Essar Telecom Country Manager Atul Chaturvedi announces new partnership with Equity Bank CEO James Mwangi.

Kenya – the Silicon Valley of Banking

Kenya is at the threshold of fast-paced growth next year, according to the World Bank. This year Kenya repeatedly demonstrated leadership in Mobile Money and this latest announcement from Essar’s YU and Equity Bank reaffirms Kenya’s status as the “Silicon Valley” of mobile banking and payments.

Over 70% of all households in Kenya use mobile money. Each mobile network operator offers a mobile money service. Safaricom and mPesa are the best known, but there are others including YU Cash by Obopay and it is becoming a very competitive market which is pushing providers to bring mobile money services to the next level in order to meet demand and compete for customers. Yesterday, YU and its innovation partner, Equity Bank, upped the ante by announcing new functionality made possible by offering mobile money customers the ability to access their service directly from a full service Equity Bank account. This is a concept that we at Obopay call a “mapped bank account”. It provides the customer with the choice of a full service bank account, complete with mobile money services, with the ability to transact directly from that account, rather than through a separate mobile account.  .

How does Mobile Money work in Kenya?

Mobile Money is transforming Kenya. 3 years ago it was a typical cash centric emerging market whereby most consumer transactions were cash based. Then almost overnight things changed when Safaricom offered its customer’s a “mobile wallet” to store money, send money, and pay for things directly from the phone. Other mobile operators have now followed suit and provided similar capability, and it has become a must have service.

Here is how it works – users sign up at a retail location where they previously went to purchase mobile phones or prepaid airtime minutes. Once enrolled, they can load money directly on their phone by giving participating agents/retailer cash over the counter. If they need to withdraw money, they can go to any authorized agent/retailer and get cash out of their mobile phone account. The first thing people in Kenya did was use the service to send money to family members – lots of people work in the cities but have family members in rural areas. Since there are retailers supporting this everywhere – it was the fastest, safest, and most reliable way to send money overnight. It started with money transfer but now people use their mobile money to buy prepaid minutes, pay bills, buy online, and buy at stores, as a way to save money and enhance their personal security by removing the need to carry cash.

Statistics from Central Bank of Kenya indicate that remittance flows in September, 2010, increased by 12.6 per cent to $ 58.6 million, from $ 52 million in August 2010 and were 17.1 percent above the cumulative 12 months average of $ 50 million a month.

What is a mapped bank account?

Before today, most Kenya users of mobile money were limited to using money in the mobile accounts. If they had bank accounts it wasn’t easy to use the money they already had in the bank. Also, if they wanted to “upgrade” and have more services from a bank, which many of them do, that wasn’t easy.

Some providers allowed electronic transfer between bank accounts and mobile accounts – but that could take an extra step, take hours or days, and could involve extra fees.  The term we use at Obopay for this type of money movement is a “linked bank account” or a “linked card”. This is very useful since users may want to have my different accounts “linked” so I can move money between them.

At Obopay, we think “linked accounts” are necessary – but insufficient for many users. Users want the option to have full service banking and to transact directly off of their preferred account – and we deliver it via a “mapped bank accounts”.

A mapped account is a traditional bank account “mapped” to my mobile. The account has all the features the bank wants to offer AND allows the user to receive, send, or pay directly from that bank account. In addition to allowing the user to also have direct access to traditional bank accounts from their mobile. It also allows instant money movement between the traditional bank account and the mobile account. So if a user wants to use both – then they have lots of options in how they manage and spend money.

Obopay, the global leader in mobile payments, is an innovator in both mobile and mapped bank accounts. It is especially important in markets like Kenya where people often don’t live near banks. Now, with Mapped Bank accounts they can have all the services they need or want from a bank via a mobile phone.

Mobile accounts have brought limited banking to large underserved communities, mapped bank accounts in combination with mobile accounts will add full service banking to these same large underserved communities.

Obopay could not have accomplished this without great partners like Equity Bank and YU. We are proud to work with them to bring the full power of mobile and banking in an inclusive way.

Links to Press Article

http://www.businessdailyafrica.com/Corporate%20News/Equity%20links%20up%20with%20Essar%20for%20diaspora%20cash%20transfer/-/539550/1065390/-/sw7h4t/-/

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About Carol Realini

Serial Entrepreneur, Mobile Payments and Banking Pioneer, Author, Board Member Carol Realini is a successful Silicon Valley executive and expert in financial service innovation. She has worked with leading financial institutions including MasterCard and Citi, as well as numerous multinational and regional banks, to change the way banking is conducted. In 2011, as a Technology Pioneer attending the World Economic Forum, she led discussions on alternative banking at their meeting in Davos. A serial entrepreneur, she has been recognized as one of the 50 Top Women in Technology by Corporate Board Member magazine. Carol is a huge believer in the potential of mobile banking and payments to create financial inclusion - where everyone with a mobile phone has access to affordable financial services that empower their life and work. To understand Carol's vision please watch the WEF video (click on the weforum.org link below). Carol also mentors entrepreneurs providing wisdom and lessons learned from her four successful startup experiences.
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