CBA Bank partners with Safaricom to launch new full mobile banking service
Commercial Bank of Africa (CBA), Kenya's largest privately owned bank, and Kenyan mobile operator, Safaricom, have announced the launch a revolutionary mobile banking service that will now make it possible for millions of Kenyans to save, earn interest and borrow money using their mobile phones.
Known as M-Shwari, the new product is a step up from Safaricom's M-Pesa's basic mobile banking service, which launched in 2007. M-PESA's services have been a huge success, attracting more than 17 million subscribers or more than 80% of the adult population in Kenya.
M-Shwari takes the M-Pesa service to the next level, opening a broad range of banking services including interest bearing savings accounts and micro loans to M-Pesa subscribers.
The service combines CBA's 50 years of commercial banking experience with Safaricom's M-PESA service, and via CBA uses the TEMENOS T24 R12 core banking solution to help support the processing of electronic loan and bank account transactions made through the M-Pesa platform.
M-Shwari s poised to contribute to Kenya's financial inclusion agenda by making it possible for people to save as little as Ksh1, and to earn interest at rates of up to 5% p.a. on their savings. Customers of the service will be able to borrow amounts from as little as Kenyan Shillings (Ksh) 100 (around 72 pence Sterling), and the more they save the more the credit they will quality for.
It is estimated that over Ksh 300 billion sits outside the formal banking system in Kenya. M-Shwari is designed to bring some of that money in to the formal banking environment by targeting the 12 million Kenyans identified by the Central Bank of Kenya and the Kenya Bureau of Statistics as being unbanked.
Said CEO at Safaricom, Bob Collymore: 'It is simple. There are no ledger fees, no limits on the frequency of withdrawals, no minimum operating balance and no charges on deposits for M-PESA to M-Shwari Account. You do not need to go to a branch and fill in application forms. Just one click on your phone and you will have a bank account at no cost.
'M-Shwari is a groundbreaking financial service innovation that will foster a culture of saving and allow Kenyans with no collateral to access micro-saving and loans products through the convenience of their mobile phones at very competitive terms.'
David Arnott, CEO at Temenos, said: 'Temenos is very proud to be involved with M-Shwari, the next phase in M-Pesa's hugely successful journey. Our involvement advances two of our most important corporate objectives; firstly, to be at the forefront of technology innovation in the financial services industry and, secondly, to advance technology as a means of lowering costs and making banking services more accessible. Today, there are five billion mobile phone subscribers compared to 2.2 billion bank account holders and so mobile banking represents a big opportunity to bank the unbanked. We are delighted to be working with CBA and others to help realise this opportunity.'
The loans from M-Shwari will attract a one-time facilitation fee of 7.5% of the borrowed amount. In order to qualify for a loan one needs to be an M-PESA subscriber for at least six months, have some savings in the their M-Shwari account, and also use other Safaricom services such as voice, data and M-PESA.
A key innovation that M-Shwari will introduce to the Kenyan market is a feature that will allow 19 million of its customers to know how much they can borrow using the service instantly by dialing *234*6#.