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What next for Kenya’s mobile financial services industry?

In an ideal financial services industry, the whole system works together. This enables fluidity of money and information within the ecosystem, for the delivery of efficient services. The result? Better value for customers, a more robust and inclusive financial services environment.


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In reality, however, the Kenyan industry – including mobile money financial services – has many moving parts, which often operate in ‘silos’ and closed pockets of innovation and investment.

Kenya currently sits at the pinnacle of mobile financial services around the world, buoyed by a number of factors. A 2017 mobile money report by Quantum Global shows that Kenya has the highest mobile financial service penetration in Africa, covering 68 per cent of the population.

This is attributed to increased mobile phone penetration, financial and conventional infrastructure development as well as regulator and private sector participation. This has catapulted it to the top of the food chain in the mobile money sector.

To put this in perspective, a 2017 GSMA industry report shows that with over 40 per cent of the population being active mobile money users, Kenyans transacted Sh1.52 billion worth in 2016. For global money transfer, there was Sh3.13 trillion transmitted in 2017, showing the ever growing influence of mobile financial services to economy and wider financial ecosystem.

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A major factor that will certainly define the industry in the next decade will be inter-operability across different networks and systems. This will allow customers of independent digital financial service providers to transact efficiently with each other across networks and service providers.

This has been effected in the larger East African Community, and is seen as a strategy for leveraging financial inclusion to stimulate development.

Inter-operability can provide substantial benefits to the mobile financial services market in Kenya. It would enable operators to make more efficient use of their investment in financials service offerings. It would offer customers more flexible payment options which could increase the overall number and velocity of mobile money transactions.

Case in point is inter-operability for mobile money agents. An agent for a telco, for example, would be able to transact with all customers across different networks. This freedom could lead to the expansion of financial service touch points and improved accessibility for consumers.


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This would be a leap forwards in terms of financial inclusion as industry players could focus their investment on building networks in currently under-served areas, as opposed to duplicating touch points in areas that are already covered by one or more service providers. In short, the key to financial inclusion is scale.

Peer-to-peer inter-operability, the most popular form of cross-cutting access to services, has been tried and tested in Tanzania with much success.

In 2014, the four main mobile network operators in the mobile money space – Airtel, Vodacom, Tigo and Zantel – came together with two of the largest banks – CRDB Bank and National Microfinance Bank – as well as the Bank of Tanzania, to craft a set of operational regulations for inter-operability. The results are evident with mobile transactions for all operators doubling since the initial agreement in 2013, according to a GSMA report in September 2016.

The challenge restricting the uptake of inter-operability, especially in Kenya, has been the interests of competing stakeholders. Industry players fear shared access will reduce market share and dominance, and impact revenues.

While the argument may hold water, there are benefits such as increased transaction volumes and the ability for operators to tap into additional revenue streams by monetising their existing assets. Pooling of assets under such an arrangement will also lead to reduction of consumer and operator costs, ultimately providing better value for consumers.

So what needs to be done to achieve inter-operability throughout the industry? The commercial models need to be well thought out in order to provide benefits for all players, big and small. In addition, industry players must focus on building technical solutions and service platforms that are future-proof.

There are clear signs that industry players are already beginning to think this way. Financial innovations like Pesalink are a clear indication of a step towards broader inter-operability. As a nation, the time has come to fully leverage such opportunities and live up to our reputation as the cradle of mobile money.

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