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Mobile banking overtakes conventional bank services in Kenya

By Njoroge Kaburo

Over the last six years, the Kenyan government has initiated several youth development programs. The multibillion Kazi kwa Vijana (Jobs for youth) and the KSh2 billion Youth Enterprise Development Fund usually are disbursed through the usual financial institutions.

These initiatives are all tailored to deal with the unemployment menace and engaging the youth in life transforming projects.

In addition to youth loan services banks provide youth savings, financial education, and entrepreneurship training.

An indication the banks and the government are tirelessly working towards boosting the youth.

But it seems their effort to get the youth to utilize services modified to attract them is undermined by the mobile money.

All the same, the advent of mobile money transfer has created many opportunities for Kenyans including employment, access to financial services as well as acting as an effective tool for channeling currency to the banking systems.

It is evident that mobile money has to a great extent changed the traditional way of banking.

Youths now especially those not in white collar jobs prefer mobile-money transactions. This way they miss out on the youth-tailored services that the banking institutions offer.

A considerable number has also detachedly neglected their bank accounts.

Reason being that the money they traditionally used to cash in the bank is now readily sent to them through mobile phones.

In addition, mobile transfer agents are wide-spread to places where banks are yet to set-up branches. Moreover, it is no doubt that mobile money transfer saves time.

“Before ‘M-Pesa’, a mobile service owned by mobile service provider Safaricom, came in my boss used to pay me using cheques, nowadays, I get my payment through my phone,” says James Kanyi, 26 year-old office assistance based in Nairobi. “I prefer M-Pesa because I don’t have to wait for the transaction to mature as is the case with cheques,” he concludes.

Lack of knowledge on the advantages of having a bank account and illiteracy are also reasons why most youths prefer mobile banking. Also, the ease of mobile-money has further made youths reluctant in opening bank accounts.

Youths comprise the largest population in the country. Studies also show that people aged 18 to 35 years form majority of mobile and Internet users.

Now banks seem to have this figured out and they are rolling out technologically-savvy products to woo this segment.

An example is the M-KESHO service by Equity bank in partnership with Safaricom. Though such initiatives have been launched they are far from helping the youths.


A survey commissioned by Central Bank of Kenya in 2009 that determine the level of access to financial services in the country indicates that 60.1 (compared to 54.6 per cent in 2006) per cent of the money received by the youth in 2009 were transfers from relatives, mainly via M-Pesa, an indication that there is a lot of money circulating among the youths.

Over the same period, usage of non-bank financial institutions doubled from 7.5 per cent in 2006 to 17.9 per cent as most of the surveyed preferred to keep their money in the M-PESA accounts thanks to Safaricom.

Last December alone, 76 billion was transacted through mobile, while M-Pesa sees about 160,000 transactions per day, valued near $4 million.


Mobile money transfer has transformed the lives of many Kenyans particularly those in rural areas where banking institutions are rare. It also comes in handy especially during emergencies.

The youths not utilizing banking institutions are not able to make optimal use of the services provided to them and at the same time, not able to practice the art of saving from an early age.

This calls the government and banking institution to educate the youths on the importance of having a bank account, mostly for them to benefit from the services they provide.

It’s also a wake up call for banks to ensure that banking services reach out to Kenyans by setting up branches and locating agent’s neglected areas.

Njoroge Kaburo

Nairobi, Kenya.