By OKUTTAH MARK, mokuttah@ke.nationmedia.com
In Summary
- Equity Bank targets 10 million smartphones and will disable defaulters’ handsets.
- The lender announced last week that it will be launching its mobile money services next month, which will also come with voice and data service
Equity Bank
is set to give loans to its customers for purchase of 10 million
smartphones over the next four years to support the lender’s switch to
mobile banking.
The bank’s chief executive James Mwangi said in an
interview that customers will be given loans and repay the smartphones
in instalments.
“The smartphones acquired will be used as
guarantee, for those who fail to honour the contract we will simply
disable their handsets,” said Mr Mwangi.
Equity Bank announced on Monday last week that it
will be launching its mobile money services next month, which will also
come with voice and data services.
The lender acquired a Mobile Virtual Network
Operator (MVNO) licence from the communications regulator to give it
more control of its mobile banking strategy.
Besides potentially raising uptake of its mobile
banking service, Equity’s move is set to provide a new revenue stream
from the loans advanced on handsets.
“We will charge a two per cent interest rate (per
month) on the phone loans, we cannot charge an interest higher than what
we charge for our other banking products,” said Mr Mwangi.
Compared to basic handsets that retail from as low
as Sh1,500, smartphones with the capability of handling data-hungry
services sell from about Sh7,000, indicating a likely lucrative lending
opportunity for Equity, whose total loan book stands at about Sh200
billion.
Customers will choose their favourite mobile
handsets under the scheme, similar to a laptop loans deal dubbed “Laptop
ni Lazima” that targeted students.
Spectrum licence
Equity’s subsidiary for mobile services, Finserve,
is among three firms that the Communication Authority of Kenya (CAK)
licensed as Mobile Virtual Network Operators in April.
The MVNO licence enables an entity to offer
services such as customer registration, SIM card issuance, billing and
customer care to end users without holding a spectrum licence.
Other than Finserve, other providers that were
licensed include Mobile Pay Limited, owned by Tangaza Money and
ZionCell. Currently there are only slightly over 4.5 million smartphone
handsets and tablets connected to the four mobile providers; Safaricom, Airtel, Orange and yuMobile; against a mobile subscriber base of 31.3 million.
This means that most mobile subscribers have basic
phones which are not capable of accessing faster internet services such
as 3G, leaving a huge unutilised investment by the mobile firms.
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