“The way you look at the convergence between telecoms and banking is responding to what customers are looking for. Customers are looking for convenience,” Isaac Awuondo, Group CEO at Commercial Bank of Africa (CBA) told CNBC Africa.
Financial provider CBA and Kenya’s largest telecommunication Safaricom, have set-up a fixed deposit feature on M-Shwari platform named ‘Lock Savings Account’.
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M-Shwari, a paperless banking service mobile phone-based savings and loans bank account, is offered by the CBA in partnership with Safaricom under M-Pesa, its mobile money transfer platform. Within the Lock Savings Account, savers will earn interest at a rate of six per cent per year for saving of at least 500 Kenyan shillings for six months.
“After research we did a couple of years ago, in terms of the numbers of Kenyans who are in the financial system, the average is below 20 per cent of the population in Africa,” Awuondo said.
The move is expected to create a savings philosophy in Kenya.
“Everyone seems to look at M-Shwari as a micro lender, for us and our partner, Safaricom, we look at M-Shwari as trying to drive financial inclusion,” Awuondo said.
M-Shwari has attracted 897,000 loan borrowers since its launch in November 2012 and strengthened CBA’s position in retail banking.
“In terms of retained deposits we are close to five billion Kenyan shillings but in terms of transaction volumes, it is about 10 times that on the deposit side. It has done better than we expected.”
CBA, a stable and respected financial services brand in Uganda and Tanzania as well, has continued to use technology to develop valued propositions to meet the aspirations of its customers.
The bank recently overtook Equity Bank as the lender with the highest number of loan accounts buoyed by the growing number of subscribers to M-Shwari.
(READ MORE: Equity Bank set for mobile money market)
Recently financial provider Equity Bank also acquired a Mobile Virtual Network license in Kenya. The lender is also staking on its mobile division to grow its customers and borrower.