In 2017, Safaricom Chief Executive Bob Collymore sought to defend the company’s growth ambitions against a growing call to split the firm by hiving off M-Pesa from the rest of the business.
During an annual investor briefing, the late CEO responded to reports by the industry regulator and rivals that the telco was too big and posed a threat to competition in the sector.
“When you say we are too big, the question I ask is, too big compared to who?” he posed. “My competitors are the likes of Google and Facebook.”
Collymore was hinting at the trajectory the company had set its sights on, at a time when financial technology (fintech) service providers such as Branch and Tala were still dipping their toes in Kenya’s mobile lending sector.
On Wednesday, this vision became clearer when the company launched the revamped M-Pesa App, a product that could propel Kenya’s largest mobile services firm into the global market and unlock billions of shillings in new revenue streams.
The app was unveiled in December 2020 in a pilot run that saw 1.3 million customers download it from the Google Play Store and Apple’s IOS Store. It comes with significant improvements that give it an edge over the USSD function.
Aside from the usual M-Pesa functions, the new app is embedded with several mini-apps that give users the convenience of running their most common mobile money functions without leaving the ecosystem.
Users can book a seat on the Standard Gauge Railway Madaraka Express, purchase insurance cover and order a new gas cylinder and have it delivered to their homes.
They can also view M-Pesa statements stretching back six months with a breakdown of each transaction, complete with charts that visualise their spending patterns over time.
Sitoyo Lopokoiyit, newly appointed managing director of M-Pesa Africa, says the app has been designed to go beyond just mobile transactions and into a lifestyle experience similar to offerings promised by Big Tech super platforms.
“The new M-Pesa Super App has integrated all the other Safaricom products including data, voice and SMS through a mini-app,” he said.
“The reason for separation of the M-Pesa App from the Safaricom App is the way people use money is lifestyle-based and we want to be around the lifestyle of our customers.”
Safaricom’s recent unveiling of M-Pesa Global, a joint venture with parent company Vodacom, gives M-Pesa the autonomy to launch in virtually every country across the world with the new Super App as the gateway.
“Globally we are looking at it similar to an over-the-top player, similar to what Uber is,” Sitoyo said. “It’s more like Uberising M-Pesa and the app can be network agnostic.”
This means M-Pesa can also leverage on the autonomy enjoyed by Big Tech platforms such as Uber, Facebook and Google that have registered massive wins in growing their user and revenue base across the globe in the past decade without opening physical offices in majority of the countries.
As an over-the-top service provider, M-Pesa Global is playing a different ball game in terms of regulatory control and one that offers mixed prospects in terms of launching in new markets.
On one hand, onboarding new users across the globe is as easy as them logging into the Apple IOS Store or Google Play Store and downloading the app.
However, there are limitations for first-time users which could, at least at the onset, create a challenge in launching in new markets.
“M-Pesa is growing beyond our borders and is already in seven countries and looking to expand through M-Pesa Africa,” said Sitoyo.
“You need to pair the app with your SIM card as per know your customer (KYC) regulations. Then you can now use it on any data source or Wi-Fi connection without having the SIM card in.”
Visitors who travel to Kenya and roam on the Safaricom network, for example, will receive a text prompting them to download the M-Pesa App.
This will give them an option of pairing it with their Visa and MasterCard accounts and use it seamlessly within the country.
This reduces the friction associated with signing up new customers and significantly reduces the regulatory burden that comes with launching a USSD-based product in a new market.
At the same time, M-Pesa Global’s partnerships with payments service providers PayPal, Western Union and AliExpress will extend the app’s reach and facilitate entry to new markets.
“Our customers can send money to more than 500,000 cash agents and more than three billion accounts worldwide,” the company said in its latest annual report.
Growing the customer base on the app will, however, require continual tweaking and upgrades to keep users engaged.
Service providers often spend a lot of money to keep users loyal to their smartphone apps, particularly in markets where there is a wide variety of competing apps.
In developed markets, this puts the M-Pesa App in direct competition to similar smartphone apps such as Visa, PayPal, Apple Wallet and Google Pay that have a head start and more resources to deploy in defending their turf.
Safaricom says it spends between Sh3 billion and Sh4 billion annually on the M-Pesa ecosystem.
Demands to maintain a seamless, secure and user-friendly M-Pesa App with constant value additions across the various markets it will launch could increase this cost significantly in the short term.
In the local market, the challenge will be how to spur usage of the app among users that still prefer the USSD function, particularly the older generation that typically account for a big chunk of overall transactions.
Sitoyo says the company is targeting smartphone owners, currently estimated at around 30 per cent of all mobile subscribers in Kenya according to a 2017 study, to grow and scale up the app’s user base.
However, this will require extra efforts to spur usage and loyalty to the app among subscribers that still prefer the USSD function.
For example, of the 500,000 businesses registered on Safaricom’s M-Pesa Business App, 300,000 are monthly active users while the other 200,000 remain dormant.