Mobile Banking in Kenya

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Mobile phone banking: Usage experiences in Kenya

Adrian D Kamotho Njenga Lecturer of Information Systems, Catholic University of Eastern Africa E-Mail:,

The uptake of mobile phones in Kenya has been unprecedented. Of vital significance is the rapid absorption of mobile based banking services. This trend of continued reliance on mobile devices to execute monetary transactions is steadily gaining momentum. In an effort to gauge the implications of this mobile phone phenomena, this study set sets out to bring to light the critical issues arising from the emergent mobile technology innovations. This paper is structured to offer strategic insights into the current state of mobile phone banking service as well as a review of emerging service provider, customer traits as well as tactical and policy implications. Illuminative cases are also featured to drive home the fundamental paradigms of concern in this study. The paper is based on a study conducted on existing mobile banking services in Kenya alongside mobile banking experiences of different countries.

Key words: Mobile, mobile phone banking, M-banking

The remarkable gains made towards mobile phone access have seen a steady progress in the scope of innovations emanating from exploitation of these fairly new technologies. What has characterized the Kenyan mobile landscape is a rapid uptake of various services key among them the mobile based products. Mobile banking is one innovation which has progressively rendered itself in pervasive ways cutting across numerous sectors of economy and industry.

An appropriate banking environment is considered a key pillar as well as an enabler of economic growth (Koivu 2002). With the continuously emerging wave of information driven economy, the banking industry in Kenya has inevitably found itself unable to resist technological indulgence. The need for convenient ways of accessing financial resources beyond the conventional norms has seen the recurrent expansion and modernization of banking patterns. And given the huge demand for finance oriented services, institutions beside the historical banks have joined the fray in an attempt to grab a piece of the perceived cake of opportunity within the banking industry.

According to Financial Sector Deepening Kenya (FSD Kenya), the most recent data in available indicates that only 19% of adult Kenyans reported having access to a formal, regulated financial institution while over a third (38%) indicated no access to even the most rudimentary form of informal financial service. This leaves a percentage of more than 80% outside the bracket of the reach of mainstream banking.

The pent up demand for an affordable and reliable way of holding funds while ensuing that risk levels are consigned to a minimum is consistently unfolding. A system with the potential to obliterate the historical hurdles of cost and free access which have for a long time stood in the way of willing partakers of banking services evokes immediate attention and interest. The unprecedented uptake of mobile phone banking services in Kenya is a testament to this fact.

Methodology Discussions advanced in this paper are based on an analysis of the mobile phone based banking performance in terms of outlook and appropriation objectives. The study is informed by a quantitative survey on M-banking services and demand. Data on usage and exploitation patterns

was gathered through reliable cluster sampling techniques using comprehensive questionnaires. To enrich the study and address unexplained gaps in the quantitative survey, selected qualitative tools were methodically engaged to bring to light further information of pertinent nature. Mobile phone banking models from other countries served as controls for the Kenyan experience to help uncover aspects that would possibly be obscure. Key controls relied upon were the G-Cash of Philippines and...
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