The Launch of M-Kesho marks the beginning of the end of ATMs

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The launch of M-Kesho has left many bloggers and analysts asking how is Safaricom going to gain on the whole arrangement. From the look of it, it seems Equity has made a big coup in the mobile banking and now strategically placed to reap from almost 9.5 million Mpesa users and 15 million? Safaricom mobile phone subscribers.

Let start from the beginning how is M-Kesho going to work. M-Kesho, unveiled by Equity Bank and Safaricom , will allow M-Pesa account holders to deposit and withdraw cash, and get loans. The Equity bank accounts transactions can now be operated entirely using mobile phones, through Mpesa system. Now that is something. You still don’t see how Safaricom is going to gain here? Look at it critically, Mpesa system will become the transit point, for majority of the transactions taking place on Equity Accounts. As we know it now many people will not go to the bank but would rather do transactions using their mobile phones. The Mpesa agents are everywhere and at the moment stands at 17500 countrywide as compared to 80 branches of Equity.

Put a side the other services Mkesho is meant for like loans, insurance services and concentrate on the withdrawals, deposits and money transfer. If you go to Mpesa agent to deposit money, the agent receives the money and at that point you are charged nothing,? while to move money from Mpesa to Equity bank account , you are going to be charged the usual fee for sending cash from Mpesa system. First round Safaricom gains.? At that point? it becomes a deposit to Equity bank account ,there is no charges for? depositing cash.? At this point Equity does not get anything, unless there is some hidden charges i don’t know of.

Equity gets its cash when Mpesa user withdraw from the bank to the Mpesa account . Most people will withdraw from the bank to mpesa with intention of sending or doing some sort of other transactions. The other scenario is when one is traveling and would like to keep money on Mpesa which is easier to access due to the wide spread of Mpesa agents in Kenya and the portability of the mobile phones. At the end when one does the transaction using Mpesa, again Safaricom gains by charging the cost of sending money. The following diagram should demonstrate how? Safaricom would benefit in the whole arrangement than the Equity bank.

MKesho Flow

MKesho Flow

I can bet that the other banks would be trying to do the same thing in the near future. And this could be the revolutionary point for the whole concept although it has been around for sometime as pointed out by Idd Salim on his blog. Still in doubt, just tell me why Safaricom should refuse a deal which could possibly transform Mobile Phones and Mpesa system to the new ATMs. That brings me to something i have suspected for sometime, the Death of ATMS . Automated Teller Machines might have been around for sometime in the developed world but in Kenya it is a recent development and that is why it is sad to predict their death so soon.

It is easy to see why ATMs will soon not be needed in Kenya. Actually you can take direct parallel to the fixed telephone lines which have met their natural deaths in Africa . ATMs like Fixed telephone lines are fixed and in that can’t compete with mobile phones if it turns out that they are doing the same thing. The cost of setting up the ATMs is high and that is why I think banks will be happy to abandon them for the cheap easily accessible MPesa agents. Yeah, MPesa agents are all over and the best thing is, now Mpesa can be found in places which operate at wee hours of the night or 24/7 like bars ( Tropez, Jazz etc) , supermarkets like Nakumatt (LifeStyle) and of course the shops.

Mobile Stats in Kenya by Dec 2009

  • 20 million mobile phone users
  • Safaricom 15 million subscribers roughly 78 %
  • Zain 14% around 2.8 million subscibers
  • Orange 4% around 0.8 million subscribers
  • Yu 1% roughly 0.2 million subscribers
What is your opinion on the topic?
Kennedy Kachwanya
Lead Blogger at Kachwanya.com
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Kennedy Kachwanya is a technology blogger interested in mobile phones both smart and dumb, mobile apps, mobile money, social media, startups ecosystem and digital Savannah. New media must not forget the strength of old tech.
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