We have been talking about disruptive loan facilities for sometime because we are a small business and run out of liquidity often, especially for stupid reasons like paying our office phone bills and getting our reporters out to get you exclusives. Getting loans from over the counter takes long and as a new media startup we move fast and can’t wait for weeks to get a loan facility. There are alternatives.
M-Shwari, a service of Commercial Bank of Africa (CBA) and Safaricom and M-Kopo Rahisi, an Inventure product. This guys don’t give as much money as you’d want.
However, in a disruptive move, KCB and Safaricom have today launched the KCB-M-PESA Account to enable you get a loan via your mobile phone by just dialing *844#. Using the KCB M-PESA account users get a flexible repayment period ranging from one month to six months and the facility fee for the loan will start from as low as 2% interest per month for either a fixed deposit account and a target savings account.
Users can borrow from anything as low as Ksh 50 to Ksh 1 million depending on their credit score. The loan can be paid in full or via installments via the shortcode again.
KCB and Safaricom are taking on a turf privately guarded by banks which have failed individual borrowers and SME’s which heavily transact through M-PESA and have poor banking behaviour due to acess to this facilities. The service is aimed at helping democratize financial access but will as well eat into the turf of thousands of commercial banks that have focused on SMEs and the informal sector.
Kopo Kopo also last year launched a similar service dubbed Grow With Us, this might easily be killed by the KCB M-PESA Account unless the firm expands it into several countries it is operating in. Safaricom is being smart in a way too by not putting all its eggs into its deal with CBA for M-Shwari. There was actually a gentleman from CBA at the launch today and we are not sure if he was supporting Safaricom’s new partnership to launch a competing service or he was spying for his compnay or he is set to cross over to KCB.
Today’s deal gives KCB access to M-PESA’s nearly 20 million customers who actively use the service. Borrowers wil be able to borrow, deposit and save to their KCB M-PESA Account via their mobile phones just like M-Shwari does. KCB M-PESA Account is touted as the next big thing in deepening financial inclusion in the country and the region.
In the last one year KCB said it has seen its customer transactions with M-PESA triple to KShs.125 billion, while the volume of transactions has grown from 10,000 a day to 100,000.
To access the service, customers will be required to dial *844#, accept the terms and conditions and proceed to save or borrow depending on their needs. The customer’s loan limit will be determined by a number of factors, including but not limited to, the amount of savings that the customer has, the customer’s usage of M-PESA, and their savings on other KCB platforms.
The KCB M-PESA Account has flexible repayment periods from one month to six months, levies affordable interest rates starting from 2% while offering access to instant loan facilities on request. The customer can also save, place standing orders or make fixed deposits on their phones.
According to Mr. Joshua Oigara, CEO, KCB Group, “With the dynamic industry and growing competitor environment, the customer is seeking more choice in mobile banking. The customer is seeking for more value and affordable mobile banking solutions in the market.”
Mr. Oigara added that Kenyans paid bills worth Kshs.1 billion through M-PESA to KCB, deposited KShs.59 billion and withdrew a total of KShs.66 billion.
Safaricom and KCB Group are not doing this for the first time.
In June last year, the firms launched their first joint proposition, Biashar@Smart, which offers a suite of technology and financial solutions, geared at enabling SMEs to grow to the next level.
“Mobile technology has greatly transformed our lifestyles in the 21st century. It is increasingly making it more convenient for customers to pay utility bills, withdraw or deposit money in their bank accounts as well as borrow by the click of a button,” concluded Safaricom Chief Executive Officer, Bob Collymore.