When M-Pesa was launched in 2007 within a year it became widely popular. By 2010, the company had a near monopoly on the market. Even today despite the launch of rivals like Equitel, Airtel Money, Orange Money, Tangaza Pesa and MobiKash – M-Pesa still has 70% of Kenya’s 68 million mobile money accounts.
And in the last one year, the covid pandemic has only increased the reliance on digital. So are fintechs set to overtake banks? Will telcos be the new age fintechs? ln the latest video on Africa Tomorrow, Ali Hussein, chairman, Association of Fintechs in Kenya in an exclusive interaction with WeeTracker, says, “It’s not about competition. It’s become symbiotic. Everyone needs everyone.” Ali had a candid discussion with Rishabh Lawania, Founder of Wee Media Africa [owner of WeeTracker].
“See, fintechs cannot operate without banks. In the national payment system – each fintech needs to have a bank at the backend, facilitating its transactions. Banks if you see now allow you to pay via fintechs. For instance on the Standard Chartered bank app you will have options to transfer money to KCB, National Bank of Kenya, Stanbic Bank, NedBank…and also to Safaricom,” says Hussein as an example of this “symbiotic relationship fintechs have with banks.”
According to the world bank, in Kenya 4 out of 10 people do not have bank accounts. With a fifth of its adult population unbanked, the country also still largely transacts in cash. This despite mobile money transactions hitting a record KSH 2 trillion (USD 18.21 Bn) in 2020. “As high as 85% of transactions are still in cash,” says Hussein.
So all the hype and hoopla around M-Pesa and mobile money success shows that all the payment players are just fighting for this 15% of Kenya’s digital transaction volume, says Hussein, adding, “One can also view this as an opportunity. That the country offers enormous space for growth.”
But why is cash still king? “There is still too much friction in the ecosystem. We need to make banking a lot more easier; we need a lot more partnerships. I am hoping that we will see the entry of small microfinance enterprises in this space,” says Hussein.
Innovation can also kill, so companies do need to proactive in keeping themselves up to date. “Visa, MasterCard had their card business decimated by M-Pesa. So Safaricom in turn cannot afford to be complacent. It needs to go to the next level of user experience,” says Hussein.
Safaricom is huge in Kenya, but not by global standards, so if we see the entry of Google or Amazon it might prove a game changer. So have fintechs just scratched the surface?
Do find out more about Hussein’s views on the fintech landscape in Kenya.