Equity Bank plans to launch its telecom services in July in a move expected to trigger fundamental shifts in the industry.
Through
its subsidiary, Finserve Africa, the firm will offer its banking and
mobile money products on its own network. It will also roll out services
similar to those offered by other mobile operators such as voice, data
and SMS.
Addressing investors on Monday, Equity chief
executive James Mwangi said all the bank’s 8.7 million customers would
be issued with new SIM cards on which they can make calls, send text
messages, browse the Internet and conduct mobile money transactions.
Cash
transfer services on its network will cost one per cent of the total
value of a transaction and is capped at Sh25. Additionally, the company
will provide instant loans at an interest rate of between one and two
per cent per month.
LOW-COST STRATEGY
Mr
Mwangi said the system would be inter-operable with a host of
electronic payment platforms. Users will be able to send money to any
bank account in the country, to Visa and MasterCard holders as well as
to mobile money subscribers on any local network.
“When
we launch Equity mobile money it will be different; you will be able to
transfer money to any bank account. There will be no restrictions. You
can send money to any mobile money account in the country,” said Mr
Mwangi.
Equity was licensed to become a Mobile Virtual
Network Operator earlier this year alongside Tangaza Pesa and Zioncell.
The permit allows the trio to run services similar to those offered by
the telcos but without investing in network infrastructure.
The
entry of the three, all expected to adopt a low-cost strategy to
attract customers, is likely to unsettle the status quo in the industry
currently dominated by Safaricom’s M-Pesa.
PILOT PROGRAMME
M-Pesa customers pay a minimum of Sh3 and a maximum of Sh110 for transfers to registered users within Safaricom’s network.
Equity will be counting on its huge number of banking customers to drive the uptake of the new product.
The
bank is running a pilot programme among 100 employees, which will be
expanded to about 8,000 and later 11,000 banking agents before the
service goes live.
In anticipation of demand for its
services, Equity has set up a service, dubbed Hapo Hapo, that will make
it possible for users to open bank accounts on their mobile phones.
Entry
into the telecommunication business will see Equity control the
infrastructure for its mobile banking services, an independence that the
bank’s management has desired for the last decade.
PARTNERSHIP WITH AIRTEL
Its services will ride on 60 per cent of Airtel Kenya’s excess capacity.
Under
the contract, Equity will pay Airtel a variable fee pegged on
infrastructure usage. In turn, Airtel has vowed to invest in expanding
its network coverage to match Equity’s reach.
Mr
Mwangi said the partnership with Airtel would also give the bank an
opportunity to expand to neighbouring countries where both firms have a
presence.
“As soon as we succeed in Kenya, we can move on to the region,” said Mr Mwangi.
Former
Communications Commission of Kenya director-general John Waweru has
been tapped to steer the mobile business at Finserve.
Equity
Bank has seconded its chief officer of finance, innovation and
technology, Mr John Stanley, and chief operating officer Julius
Kipng’etich.
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