A broker monitors stocks at the Nairobi Securities Exchange’s trading
floor. As at the end of September, the value of shares traded at the
Nairobi Securities Exchange, stood at Ksh115.35 billion ($1.3 billion).
Photo/FILE
By SCOLA KAMAU Special Correspondent
By SCOLA KAMAU Special Correspondent
In Summary
- In a Mobile Banking Survey released last week by the Kenya Bankers Association (KBA), lenders have cited security concerns, reliability of the system and possible breach of privacy as the biggest concerns in running mobile banking products.
- The bankers also cited tight regulations and high set-up costs as the other emerging challenges to mobile banking.
- KBA said at most banks, to some extent, perceive mobile operators as potential competitors although they were quick to clarify that the mobile operators were not in direct competition because they are registered and licensed by different regulatory bodies and hence conduct different trades.
Rising cases of fraud and regulatory bottlenecks
are blocking banks from going full-throttle on mobile banking platforms
across the East African region.
In a Mobile Banking Survey released last week by
the Kenya Bankers Association (KBA), lenders have cited security
concerns, reliability of the system and possible breach of privacy as
the biggest concerns in running mobile banking products.
The bankers also cited tight regulations and high set-up costs as the other emerging challenges to mobile banking.
Seven years after the rollout of Kenya’s
revolutionary mobile transfer service, M-Pesa, by Safaricom, regional
banks are finally starting to treat mobile phones as an important
distribution channel.
KCB, Diamond Trust Bank, Equity, NIC, Standard
Chartered and Barclays banks are among the lenders with a regional
presence that use mobile banking services.
This is reshaping the future of national payment
systems in the region by marrying financial services and technology more
closely than it was thought possible.
This has boosted the ability of the banks to
distribute products cheaply, run the back office and enhance
capabilities for cross-selling products. But fraud is emerging as the
biggest threat to mobile-banking, a platform seen as a key frontier to
growth of the sector.
A report by Deloitte East Africa, titled Financial Crime Survey 2013,
shows that financial institutions across the region have lost in excess
of $30 million to fraud, though the figure could be as high as $89.41
million since most institutions opt not to report cases of fraud.
KBA said at most banks, to some extent, perceive
mobile operators as potential competitors although they were quick to
clarify that the mobile operators were not in direct competition because
they are registered and licensed by different regulatory bodies and
hence conduct different trades.
“However, the fact that the mobile operators offer
money transfer services that were traditionally left to the banks has
led to some business and revenue loss for the banks, to the extent that
if left unregulated may have an effect on the larger banking scene,”
said KBA.
Telecoms operators have also intensified their
investments in mobile money transfer services, seeking new revenue
streams as the voice market matures, leaving little room for growth.
Voice, however, remains the major contributor of most of the telcos’
revenues.
The KBA survey released on Tuesday shows
penetration of mobile banking as still low, given Kenya’s high use of
mobile phones. Data from the Communication Commission of Kenya shows at
least 20 million Kenyans use mobile phones. But users of the mobile
banking platforms are still faced with operational bottlenecks.
“... they cannot transact when the mobile phone
network is down, sometimes transactions are not online, some services
are not available on mobile banking platform and phone software cannot
access some utilities of mobile banking,” said KBA chief executive Habil
Olaka.
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