Mobilephone Financial Services (MFS) in Kenya, has greatly revolutionized Kenya’s economic and financial landscape and the world at large. The inception of M-Pesa allowed for technology-enablement and financial innovation that has fostered financial inclusion and set the pace for the digital economy. MFS has driven partnerships with other industries and played a vital role in meeting the changing customer preferences and demands seamlessly in a more efficient, affordable and userfriendly manner.
A 2018 Banking Supervision Report by CBK has revealed that with the emergence of numerous mobile money platforms, as at December 2018, there were over 16 million active mobile phone deposit accounts valued at over Ksh.105 billion, corresponding to 30.43 percent and 3.1 percent of total industry deposit accounts numbers and values respectively. Over the same period, there were 7 million active mobile phone loan accounts valued at over Ksh.60 billion, corresponding to 97.49 percent and 2.41 percent of total industry loan accounts numbers and values respectively.
This is a clear indicator that the Financial Services industry is being impacted by the ever-changing consumer needs, innovative financial products, technological advancement and the use of multiple delivery channels. Kenyans are slowly making the most of mobile money platforms without necessarily going through agency banking, popular for cash deposits, cash withdrawals, and account balance inquiries.
According to the report, there was a decline in the number of agents contracted by commercial banks and microfinance attributed to the closure of some of the agents in the study period due to low business volumes and low income earned by the agents rendering the agents inactive. Also, the closure of some contracted agents during the period and continued competition from other alternative delivery channels such as the increased mobile phone banking products, which are considered more convenient as compared to the use of agents.