What’s driving Equity Bank?

Equity Bank, the largest Kenyan lender by customer numbers, has always hoped to go big on mobile banking to deliver financial services to its eight million account holders.

“This is a plan I have had for the past 12 years. In fact, we have had a director of innovations for the past eight years,” said Dr James Mwangi, Equity Group Chief Executive Officer, in a previous interview.

The Nairobi Securities Exchange-listed bank made a significant leap into the telecoms mobile money space with M-Kesho in 2010. The venture was largely unsuccessful due to complications in revenue sharing and business models between it and Safaricom. The telco later went ahead to partner with Commercial Bank of Africa to launch a similar product, M-Shwari, in 2012.

Electronic payments

In its quest to dominate financial services in Kenya, Equity Bank has slowly entered the IT sector. It recently built one of the few Tier 4 data centres in East Africa and will lease out 90 per cent of this capacity to enterprises.

The bank has also signed a number of agreements with Visa, PayPal and MasterCard to become a dominant player in the growing electronic payments space. MasterCard and Equity’s offering allows users to carry out cashless transactions on their handsets through mobile points of sale.

The bank has turned to mobile phones as a cheaper and more convenient point of sale, compared to traditional swipe card readers.

It recently announced it would issue 300,000 smartphones to supermarkets, restaurants, kiosks, and barbershops free of charge to facilitate cashless transactions and boost its income from payments processing.

Its race for a piece of the lucrative retail payments market puts it head to head with Safaricom, which has been issuing M-Pesa pay bill numbers to retailers under the Lipa Na M-Pesa service to facilitate cashless transactions.

In this way, Equity is taking on Safaricom on its own turf — technology — just like Safaricom brought the game to banks on their turf — money transfer and banking.

By having its own network, Equity Bank could rattle Safaricom out of its middleman role, thus increasing its earnings.