Equity's entry into telecoms sector to trigger radical shifts [Nation (Kenya)]
(Nation (Kenya) Via Acquire Media NewsEdge) Equity Bank plans to launch its telecom services in July in a move expected to trigger fundamental shifts in the industry.
Through its subsidiary, Finserve Africa, the firm will offer its banking and mobile money products on its own network. It will also roll out services similar to those offered by other mobile operators such as voice, data and SMS.
Addressing investors on Monday, Equity chief executive James Mwangi said all the bank's 8.7 million customers would be issued with new SIM cards on which they can make calls, send text messages, browse the Internet and conduct mobile money transactions.
Cash transfer services on its network will cost one per cent of the total value of a transaction and is capped at Sh25. Additionally, the company will provide instant loans at an interest rate of between one and two per cent per month.
Mr Mwangi said the system would be inter-operable with a host of electronic payment platforms. Users will be able to send money to any bank account in the country, to Visa and MasterCard holders as well as to mobile money subscribers on any local network.
"When we launch Equity mobile money it will be different; you will be able to transfer money to any bank account. There will be no restrictions. You can send money to any mobile money account in the country," said Mr Mwangi.
Equity was licensed to become a Mobile Virtual Network Operator earlier this year alongside Tangaza Pesa and Zioncell. The permit allows the trio to run services similar to those offered by the telcos but without investing in network infrastructure.
The entry of the three, all expected to adopt a low-cost strategy to attract customers, is likely to unsettle the status quo in the industry currently dominated by Safaricom's M-Pesa.
M-Pesa customers pay a minimum of Sh3 and a maximum of Sh110 for transfers to registered users within Safaricom's network.
Equity will be counting on its huge number of banking customers to drive the uptake of the new product.
The bank is running a pilot programme among 100 employees, which will be expanded to about 8,000 and later 11,000 banking agents before the service goes live.
In anticipation of demand for its services, Equity has set up a service, dubbed Hapo Hapo, that will make it possible for users to open bank accounts on their mobile phones.
Entry into the telecommunication business will see Equity control the infrastructure for its mobile banking services, an independence that the bank's management has desired for the last decade.
PARTNERSHIP WITH AIRTEL
Its services will ride on 60 per cent of Airtel Kenya's excess capacity.
Under the contract, Equity will pay Airtel a variable fee pegged on infrastructure usage. In turn, Airtel has vowed to invest in expanding its network coverage to match Equity's reach.
Mr Mwangi said the partnership with Airtel would also give the bank an opportunity to expand to neighbouring countries where both firms have a presence.
"As soon as we succeed in Kenya, we can move on to the region," said Mr Mwangi.
Former Communications Commission of Kenya director-general John Waweru has been tapped to steer the mobile business at Finserve.
Equity Bank has seconded its chief officer of finance, innovation and technology, Mr John Stanley, and chief operating officer Julius Kipng'etich.
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