Kenya’s mobile banking pioneer: ‘We need to focus on the customer experience’
Kenya Commercial Bank (KCB) wants to be a leader in the continent’s burgeoning financial technology (fintech) industry. Being next to an innovation hub in Nairobi certainly helps. Having strong links to Asia’s biggest economy – China – does not hurt either.
Thanks to the success of M-Pesa, the popular mobile-money service offered by telecoms operator Safaricom that is now used by more than 25 million people, Kenya is a testing ground for the mobile-payment revolution. This is something KCB, as East Africa’s largest bank by assets, is capitalising on.
KCB partnered with Safaricom in 2015 to launch KCB M-Pesa, a mobile-based bank account. The service now boasts more than 15 million customers, according to Edward Ndichu, KCB Group’s head of digital financial services and mobile payments.
The bank’s new mobile lending models have also been a success. Ndichu tells The Africa Report: “We used to take customers through very arduous processes to be able to make an application for a loan and to be able to access the loan; so much so that the limits for a loan were pretty high because the cost of processing a loan didn’t justify the lower limits.” He adds: “But now, using new sources of data to determine credit risk has allowed the bank to issue more loans.” In late 2016, KCB said it had issued nearly $100m of loans and was handling an average of 30,000 loan requests from mobile phones every day.
The mobile-banking sector is still in its early stage of development, Ndichu says: “Mobile money makes more sense for consumers than mobile banking. Today, we have a 30-40% penetration of mobile banking with consumers. As banks, we’ve not done a very good job in getting customers to use mobile phones to access their accounts.” One reason offered for this lacklustre performance is that the banking experience currently on offer is not grabbing the consumer.
“It’s not really about giving them a bank account – it’s about giving them an experience,” Ndichu says, noting the growing role of smartphones in the banking world. Ndichu points to Apple Pay and Google Wallet as exciting services that resonate with customers. “If you focus on giving the customer the experience and not just simply a bank account, then you realise the massive opportunity that you have today.”
KCB is in preliminary talks with US tech giants Facebook, Apple and Google about offering new services in East Africa. “In terms of specific products, we’ve not gotten into that conversation. But of course there’s the Android platform that we’re considering, there’s the Apple Pay platform that we’re having conversations with.” The bank is due to launch these new services within the next two years.
One of the challenges the bank is facing is scaling up its mobile-banking services to reach more people. “We are increasingly going to work with more global partners,” Ndichu says.
The Chinese market is of particular interest to KCB. Kenya imported $2.1bn worth of goods from China in 2013, according to the World Bank. Successful Chinese e-commerce company Alibaba, which posted $435bn in gross merchandise volume last year, is an interesting example for KCB, says Ndichu.
“We’re looking significantly at East Asia, with the success we’ve seen with WeChat and Alibaba. Can we connect East Asia with Africa using fintech?” Ndichu asks. “For an African today to pay a Chinese person, or a Chinese person to pay an African, it’s a very painful process, and we’re asking ourselves, can we make this better?”
This interview first appeared in the May 2017 print edition of The Africa Report magazine