Mobile Banking in Kenya

Mobile banking in Kenya has experienced a boom in the last ten years. It has risen to become one of the most important methods for Kenyans, perhaps like yourself, to use to transfer, pay and receive Kenyan Shillings.

The ability to send and receive money on your phone may seem like a straightforward idea now that so many people have smartphones. But mobile banking worked before smartphones were around and to this day continues to thrive as a money transfer service on standard mobile phones across the world.

Let’s take a look at the rise of mobile banking and mobile wallets, some companies that dominate the space and the benefits it has brought to the people of Kenya.

The Rise of Mobile Banking in Kenya

Kenya has led the world in the expansion of mobile banking. It is a country where “96 percent of households have a mobile money account, and you can find an agent almost anywhere.”(Vox)

It is a simple system that has proved to be very effective across Africa. “Already, 400 million consumers in sub-Saharan Africa use mobile payment banking systems to handle $300 billion worth of mobile money transactions...By 2025, the mobile payment market could reach 650 million to 750 million customers” (BCG).

The system is huge. Mobile banking services, like M-PESA, are virtual banking systems that provide financial transaction services through a SIM card. Users can send payments and transfer money to vendors, friends or family through SMS messages.

It is an ingeniously simple system that has made Kenya a more financially inclusive country, allowing people to access and send money in ways that are impossible with traditional banking services.

Important to know - you don’t need a traditional bank account in Kenya to use mobile banking.

Money can be accessed via agents and outlets across Kenya. “The money that needs to be stored is given to the kiosk attendant, who transfers the amount in digital form to the user's mobile banking account (investopedia).

And when a company like M-PESA has 400,000 agents across seven countries, it means that users never need to worry about accessing their funds. With a click of a button on their mobile they can do business, support loved ones and save money.

What about Mobile Wallets in Kenya?

Mobile wallets are part of the extended family of mobile banking.

A mobile banking service allows you to conduct financial transactions through a mobile device. Whereas, a mobile wallet enables you to store debit and credit cards, personal financial information, and things like vouchers.

Alongside mobile banking, the mobile wallet sector is experiencing a rise too. The “mobile wallet payment segment in value terms increased at a CAGR of 15.7% during 2018-2025.”(Businesswire)

A company like M-PESA offers both a mobile banking and a mobile wallet service in Kenya. The wallet system allows you to move all your financial transactions and information on to a digital device. You no longer have to carry around a stack of cards. It’s all on your phone.

The rise of mobile banking in Kenya precipitated a rise of mobile wallet services. In particular companies like M-PESA and Airtel now offer extensive support for mobile wallets.

Why is M-PESA’s mobile banking services so popular?

M-PESA has become a dominating force in Kenyan mobile banking. “The service is a blend of two entities where M means mobile and Pes ameans money or payment in the Swahili language” (Investopedia

It is a mobile banking service that enables users to store and transfer money through their mobile phones. They were the first company in Kenya to offer such services and the M-PESA Founders, Susie Lonie and Nick Hughes, had the foresight to know how useful it could be.

“The project that became M-Pesa started in 2002 when phone companies noticed that they had unintentionally invented something that almost resembled a currency.

Users in Kenya were purchasing and reselling “airtime” — phone data, or minutes — transferring it to relatives, and in some cases effectively using it as a savings account by putting most of their wealth into airtime they could resell later. It was safer than carrying cash around, and more convenient than a bank because airtime vendors were ubiquitous.”(Vox)Today, M-PESA is so popular that it “has captured roughly 70% of households in Kenya, and over 50% of lower income households, demonstrating its contribution to financial inclusion.”(HBS)

Their success is a testament to how solid the original idea was. They knew that if you can transfer money quickly, and securely it could revolutionise the economic agency of business people and normal individuals in Kenya. “Research suggests that the fast mobile money systems led to significant economic growth” across Kenya.(Vox)

Benefits of Mobile Banking

Mobile banking has taken off for multiple reasons. The main benefits include:

• Safety

The origins of mobile banking are in part connected to the need to be able to safely and securely hold and transfer money. Before mobile banking, in Kenya you often had to carry cash. In busy cities or isolated streets there is always a risk of carrying large amounts of cash. The mobile banking system solved this problem.

• Convenience

Mobile banking is convenient and fast. Anyone with a phone can send and receive money from anyone across the country. You are no longer limited by distance. It is accessible to everyone and because of the substantial infrastructure in place it is the most convenient method of transferring money to friends and family.

• Cost-effectiveness

In Kenya, mobile payments are relatively inexpensive to the user. The cheap rates of services like M-PESA, Airtel and Equitel reduce costs of financial products.

• It helps small business

Mobile wallets and mobile banking service have allowed small businesses to become more flexible and sustainable. “The introduction of M-PESA has spurred a host of Kenyan startups who run their businesses wholly on mobile phones”(HBS).

Small businesses have been able to reach further and act more reliably on their finances. Mobile banking has helped to facilitate business services that may not have been possible with a traditional banking system.

Small World Services in Kenya

Clearly mobile banking in Kenya is here to stay.

We recognise that many people want to be able to transfer money safely and securely to mobile bank accounts. That’s why Small World is partnered with some of the most important mobile banking establishments in Kenya, such as M-PESA, Airtel and Equitel.

Sending money to Kenya is easy with Small World. Sending M-PESA payments and transferring money to friends and family is seamless when you use Small World. We work hard, so you can focus on supporting your family as easily as possible.