Mobile money transfer is big business in Kenya and is a preserve of the three leading mobile operators. But this is set to change. Six commercial banks have the approval of the Central Bank of Kenya (CBK) to launch their platform for mobile money transfer.
The Kenya Bankers Association (KBA) has come up with an Interbank Transaction Switch that will accommodate many services. Among these is real-time money transfer between banks. At present, banks rely on the mobile operators to facilitate some transactions through their money transfer platforms.
According to the Kenya Bankers Association (KBA) Chief Executive, Mr. Habil Olaka, approvals have been coming in for the last two weeks. Among the approved bank are Equity Bank, Commercial Bank of Africa, Barclays Bank and Standard Chartered. The six banks now have approval from the regulator to sign up customers on a pilot basis before the official launch in two months time.
Mr. Olaka goes on to say “We started operating the system on a pilot basis towards the end of last year and will now move to incorporate the approved banks and their customers as and when they receive the go-ahead”.
A further 22 banking institutions that are in the trial stage include Stanbic Bank, Co-op Bank, NIC Bank, Spire Bank, Diamond Trust Bank, Kenya Women Finance Trust, First Community Bank, Guardian Bank, Family Bank, Paramount Bank and Consolidated Bank.
“Once a bank gets approved, they immediately start onboarding customers into the system,” said Mr.Olaka, adding that to get on board, customers must visit their banks to sign for the service.
The Kenya Bankers Association expects to switch to the platform in eight weeks or less. But it depends on the success of the pilot project. Further, the launch could go on even though some banks are not ready. All that is needed is to get the majority of customers on board, according to Mr. Olaka.
The Kenya Bankers Association will operate the Integrated Payments Services Limited (IPSL). It will be a 24-hour real-time platform. The system will no doubt alter the process of clearing cheques, which take at least two days to mature. It will also stir stiff competition between banks and the mobile operators’ products, especially Airtel, Orange Money, and M-pesa.
Plans of Kenya Bankers Association to switch in August did not materialize due to the regulator’s delay in issuing approvals.
Central Bank of Kenya required member banks to submit for approval, the products they plan to offer through ATMs, mobile, agency networks, over the counter, and the internet.
The Integrated Payments Services Limited (IPSL) is under the Central Bank of Kenya (CBK) National Payment System (NPS) guidelines. The expectation is that the system will cut costs by interconnecting all banks. Both customers and the banks will benefit in the new arrangement.
Featured Image Freepik
