Equity Bank to offer new mobile banking service to challenge telecoms companies in Kenya
Kenyan Equity Bank has launched its own telecoms offering, aiming to break into mobile banking market, which in Kenya has been dominated for several years by telecoms companies; most local banks in the country have opted to partner with these firms, rather than challenge them. Equity Bank's new service reportedly allows it to utilise the existing mobile service provider's infrastructure. The bank will be looking to challenge Safaricom, the country&rsquo;s largest mobile phone services company, with about a 60% market share.
Kenya is known as a hot bed of mobile money payments with products like Safaricom’s — the country’s largest mobile phone services company with about 60 percent market share — M-pesa changing the way people transact goods and services.

It is not a secret anymore that Kenya leads Africa and the world beyond in such mobile money services that allow subscribers to perform banking and payment operations right out of their phones.

There is however another revolution that is taking place in the East African nation of 45 million people.

For several years local commercial banks have been playing catch up to telecoms after being outsmarted in the race to introducing mobile money, leaving them no option but to partner with the mobile phones operators to reaches their client with mobile financial products.

One bank however has broken away and launched its own telecommunication service through what they call thin SIM technology, that allows banks to ride on existing mobile service provider’s infrastructure.

Equity Bank, Kenya’s largest bank by customers, this week launched its own thin SIM in the market through its telecoms unit Equitel that run on the infrastructure of Bharti Airtel’s local arm.

The bank, which has branches in Uganda, Tanzania, Rwanda and South Sudan, said it had already registered over one million subscribers during a trial run that started in October last year and was planning to reach five million subscribers in the East Africa region by the end of this year.



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“We believe that Equitel will be very disruptive because it changes the way things have been done,” James Mwangi, Equity Bank’s chief executive officer said in an interview with CitizenTV.

“It brings in convergence between banking and telecommunication for the first time. Essentially changing the way banking is done. Presently we go to banks. With Equitel the bank is with you 24 hours a day. So we’ve removed geographical distance and we’ve removed time as a factor in accessing banking.”

Equity’s launch has been seen by industry analysts as a challenge to the dominance of Safaricom, which launched its mobile-based financial service product, M-Pesa, in 2007 and has about 23 million active users that use the platform to transfer money, pay bills, save and access micro-loans.

Bob Collymore, Safaricom’s chief executive, said in a statement after the Equitel launch that his company, which is partly owned by UK-based vodaphone, was not afraid of competition and it welcomed it.

“We welcome competition; it is a true indicator of the free and robust operating environment we have in Kenya,” Collymore said.

But that was not Safaricom’s stance in early 2014 when Equity Bank first attempted to introduce a thin SIM in the Kenya market after it acquired a telecom license.

Safaricom could not take this lying down and took all steps to stop Equity Bank by filing a petition to the communication regulator saying that the thin SIM technology could compromise the security of its mobile money service users.

The petition however failed and Equity Bank was allowed to go ahead with the thin SIM distribution.

“These complaints are just another attempt to create barriers to entry in order to reduce competition,” the late Mwangi Kimenyi, senior fellow and former director of the Africa Growth Initiative (AGI) at the Brookings Institution, said in an opinion piece.