The KCB Group Ltd. Chief Executive Officer, Joshua Oigara recently confirmed that the bank is in talks with Facebook, Apple Inc and Alibaba Group with an aim to collaborate on digital payments through its new financial-technology unit, KCB Fintech. The unit is expected to start operations in June 2017. KCB aims to reach 20 million customers by the end of 2017 and has also held talks with Tencent Holdings Ltd and Alphabet Inc.
The KCB-M-Pesa Connection
Speaking to Bloomberg, Oigara said the subsidiary will “partner with different players, whether it is M-Pesa, Facebook, Google, Apple and that business will have a new digital-payments platform.” M-Pesa was founded as a corporate social responsibility initiative by Vodafone and Safaricom to facilitate for financial access for micro-lending. It however has become the ultimate mobile money platform in the world changing the rules in the financial services sector since April 2007. There is already a previous relationship between KCB and M-Pesa, which as noted by Business Insider partnered to offer users KCB M-Pesa, a mobile phone-based loan service. The digital payments platform is therefore expected to bolster KCB M-Pesa and increase the dominance of the venture in the financial landscape.
The Kenyan gold-mine
Since M-Pesa introduced Kenyans to a life of convenience, they have embraced digital payments thus making the KCB venture timeous. According to Mastercard 90% of consumers in Kenya use their mobile phones than any other device and 87% prefer mobile payments to other forms of payment. Data from the Communications Authority of Kenya shows that in Q1 2016, 25 million mobile-money subscribers spent $3.1 billion on goods and services making the digital payments provision business a lucrative venture. This is also amplified by the fact that the government capped lending rates therefore pressuring margins. Fuelling the KCB drive in digital payments, Business Insider says is the fact that, “Consumers in Kenya, Uganda, Rwanda, and Tanzania amassed $45.74 billion in mobile transactions during 2014, accounting for 32% of the countries' combined GDP. This is a large increase from the $4.86 billion in mobile transactions, or 3.4% of aggregate GDP, in 2009. The rapid increase in mobile transactions clearly shows that consumers are adopting this form of payment, and could be willing to embrace further capabilities.” The KCB Fintech is expected to tap into this market which is already a gold-mine on paper. The Kenyans are embracing technology and the traditional insecurities of digital payments are a thing of the past. There might never be a better chance for companies to tap in and make an impact in the digital payments terrain while KCB will also reach a larger mobile user base.
The big changes
The CEO of KCB also said the bank was doubling capacity on its mobile-phone systems from 300 transactions per second by 2017. This comes as a surge in demand for loans made the platform to crash last week. The man who will head KCB Fintech, Mr Edward Ndichu also said the bank is in talks with Paypal Holdings, Samsung Electronics and Twitter. Bloomberg however says the KCB Group had lost 38 percent in share value by close of Thursday trading in Nairobi. If the talks bear fruit, it is to be expected that KCB’s share value will increase in expectation of better prospects.