Mobile Banking Outpaces Traditional Banking in Kenya
BY Jessica McKenzie | Wednesday, April 24 2013
Kenya’s mobile networks last year collectively held more in deposits than the country’s largest bank. The telecoms regulator CCK reported the mobile networks held Sh226 billion ($2.70 billion) in deposits at the end of last year while the largest commercial bank held Sh223 billion ($2.66 billion). The report said the number of mobile money transfer subscribers grew to 21.1 million from 19.3 million in the previous period, a growth of 9.4 percent.
Mobile payments allow people without access to a bank or large financial resources to make safe financial transactions at a lower cost. Last summer techPresident covered this growing trend in depth, taking a close look at Afghanistan as a case study. A Brookings Institution video introduces the basics of mobile money and its potential value for developing economies.
The most notable mobile banking system is M-Pesa, which was launched in Kenya in 2007. A super cute animated video, narrated by the managing director of mobile money at Vodafone, walks viewers through the development and success of M-Pesa.
However, the success M-Pesa found in Kenya has not been replicated elsewhere. A Brookings Institution report delved into why that may be. They put forth two potential hindrances to mobile banking in other developing economies. The first is that, after seeing the success of mobile banking in Kenya, governments might be more hesitant to fully support mobile banking and prefer to support vested interests in the traditional banking sector. The second possible reason is that all of the preparatory work invested before the launch of M-Pesa must also be performed in new markets in order to have similar results, work that requires time, money and patience.
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