Customers queue at a banking hall. A report by UK research firm Research
and Markets has tipped online banking to reduce the numbers of the
country’s unbanked through use of mobile wallet services. PHOTO | FILE
NATION MEDIA GROUP
Kenya’s pioneering cashless system
involving the use of mobile phones to pay for utilities and services has
created fertile ground for a nationwide launch of an online-based
financial system.
UK based research firm, Research and
Markets, says mass adoption of cashless services that last year saw
Kenyans carry out Sh1.7 trillion in transactions through the mobile
phones could be taken to new heights once they embrace the use of
Wi-fi-enabled phones that support online transactions within businesses
that enjoy ‘hotspot’ services. (READ: Mobile cash transactions hit Sh1.7trn)
“Hotspot’
services that provide free Wi-fi to customers, notes the report, would
permit them to use their phones to settle payments instead of using
the traditional banking channels.
“Increased global
penetration of smartphone use, together with the widespread use of NFC
(Near Field Communication) technology in the form of embedded tags is
driving the mobile wallet market,” the report said, adding that
embracing a cashless system would be a key driver in the faster adoption
of the wallet technology across the country.
“Smartphones and associated applications are the pre-requirements for mobile wallet technology,” the report said.
It
further observed that Kenya enjoys a favourable regulatory regime that
is driving adoption of mobile wallet technology which saw mobile phone
companies expand access to financial services to far-flung areas where
conventional banking services might otherwise not reach.
“Initiatives
from governments to encourage the use of mobile wallet is gaining
momentum in emerging markets such as Kenya and The Philippines due to
the larger gap between bank and non-bank organisations.
“Financial
inclusion is the crucial factor to reduce this gap which can be
accomplished by agreements between governments, telecom companies and
financial organisations,” the report said.
It comes
barely a month after the Global Mobile Companies Association showed the
demand for smartphones among Kenyans was on the rise and is growing at
the third-highest rate in Africa after South Africa and Nigeria.
INCREASING DEMAND
The
Research and Markets audit said growing demand for smartphones has also
resulted in the expansion of the mobile wallet industry.
Online
payments need an active data connection, which means the rise in mobile
data usage is equally contributing to the growth of this market.
The
study, which analyses the industry by size, share, growth and forecast
to 2018, notes that a large number of consumers are unbanked and do not
have proper access to financial services provided by financial
institutions. It calls mobile wallets the ultimate solution.
This
has seen local companies led by Safaricom register major increases in
revenue from charges levied on mobile money transfer services.
“Mobile
wallets are customisable and can be used to identify user credentials
during the process of online payments where personal identification
documents such as driving licence, passport and social security numbers
can be easily verified.
“This has helped the online
based transactions to grow, due to which this technology is enjoying
considerable support from regulatory bodies. Mobile wallet facility can
be integrated with the authentication programs to serve the dual purpose
of authentication and mobile payments.”
Several banks
have also introduce online based platforms enabling their customers to
transact businesses without necessary visiting the bank branches.
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