By James Anyanzwa
Fierce competition looms in the banking industry after the Central Bank approved the use of mobile phones in money transfer services.
The regulator’s latest position is widely expected to quell battles over the control of the profitable money transfer services, which have seen commercial banks put up resistance, faulting mobile phone operators of stepping into their territory without proper regulations.
In an apparent clearance to telecommunication companies to offer the service, the CBK pointed out that an elaborate mobile banking structure was critical to reducing the large number of unbanked Kenyans currently estimated at 81 per cent of the population.
The decision is a boost to Zain Kenya’s Zap Pesa Mkononi and Safaricom’s M-Pesa money services, which have a clear edge over the banks, because they cost overwhelmingly less, and deliver funds over great distances in real time.
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Prof Njuguna Ndung’u, the bank’s governor, acknowledged concerns over the safety and protection of the consumers saying such fears would be dealt with through frequent evaluations of the service providers.
"Kenya has seen the successful launch of mobile phone money transfer services spearheaded by telecommunication players such as Safaricom, and others have joined in this lucrative business.
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It is important to note that the Central Bank continues to engage these players through frequent evaluations for purposes of safety and efficiency," Ndung’u told a mobile banking conference in Nairobi, on Monday.
He said the assessment would focus mainly on liquidity management, settlement risks, system reliability, system audit trail, anti-money laundering and consumer protection issues.
Ndung’u said CBK would constantly evaluate money transfer services offered by mobile phone operators to ensure they are safe and efficient.
He said the bank would collaborate with other players in the industry to put in place an enabling legal and regulatory environment to catalyse mobile banking transactions.
"We are open to all proposals, the market is developing and we cannot hold back on them."
He said safe and efficient payment systems are essential for the proper functioning of the financial market including the implementation of monetary policy.
He said mobile phone money transfers was not an alternative bank account but a service for money transfer.
