Category Archives: bank charges

Kenyan Banks Try To Slice Out Mpesa

Kenyans spent 59 billion ($590 million) sending money last year, said James Mwangi, Equity Bank CEO at a recent investor briefing , and that’s a lot of money.

A good chunk of the daily transactions payments and transfer involve people withdrawing money from their bank account to their phone which they then send  (via M-pesa or other telco services), to recipients, who then re-deposit it in their bank accounts, also by phone. Some bankers feel that M-pesa does not pay it’s fair share of bank costs, as they are the ones who pay for insurance, cash in transit, cash handling fees – these are costs that consumers don’t see

So the banker’s umbrella body, the Kenya Bankers Association, has now set up Integrated Payments Service (IPSL), a fully owned subsidiary to provide technology-based payment solutions to the association’s member banks, at subsidized rates.

It is in testing with 20 banks, and once complete, the IPSL system will provide a safe, secure and cost efficient platform for person-to-person (P2P) money transfer.. (via) the five main bank channels: mobile banking (USSD & Application), internet banking, ATM, branch front office, agency Banking and POS.

Google bans short term loan adverts

Google just announced some changes to their adwords rules. They often review these and the ads that they support and .. in 2015 alone, (they) disabled more than 780 million ads for reasons ranging from counterfeiting to phishing. 

The main change is that they will be banning payday loans and loans whose repayments are less than 2 months (i.e short term) as..research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that.

Short term loans are increasing in volume in Kenya, thanks to mobile phone penetration. This week, both Equity Bank and Safaricom released financial results and there were some interesting notes about short term loans, mainly processed via phone.

  • Safaricom M-Shwari: had Kshs 10.0 billion loans at year-end (March 31).
  • KCB – MPESA loans were Kshs 1.47 billion.
  • One million people have taken mobile phone loans at Equity Bank, totaling about Kshs 4 billion. The loans are now one month in duration, and they will progressively increase this to 3 months, then 6 month, and eventually one year as they get better at understanding their users after profilng and checking their credit (with credit reference bureaus). The loans are  approved within a few seconds of application and disbursed directly to the borrower’s mobile phones.

The banks don’t have to advertise these loans on google, as they are right in the user menus of every phone.

$1 = Kshs 100

Do Kenyans Have More Financial Access than Americans?

This week, FSD Kenya released  Financial Access 2016, their fourth report, after others in 2006, 2009 and 2013. This year is the 10th anniversary of FSD Kenya, and much has changed since the first survey was done back in 2006 which showed that 40% of Kenyans were excluded from financial services.  The Financial Access report will now be done annually, and will feature in the national statical publication – the Kenya Economic Survey, from April  2016 onwards.

Central Bank Deputy Governor, Sheila M’Mbijjewe, said that she was happy that the report drilled down into trying to understand the differences in financial access and usage between men and women, and between rural and urban residents, but that the government would now like to see more from mobile money in terms of quality of financial products and impact, as access and usage are no longer enough.

Image by 'Joshua Wanyama ('Africaknows.com')

She also said that the study’s finding that 75% of Kenyans have financial services access, was higher than the USA figure of 67%. Another important finding was that, while cash remains king as a payment option for a majority of the population, 59% of Kenyans now have more than one way of paying for things – compared to 18% in the first survey.

Points to Consider before Switching Bank Accounts

This was inspired by a query from ‏@KaranjaJ on if there Is there a .Ke bank that delivers on its promise or is their verbal communication a load of B.S

1. Find a bank you’re comfortable with. You should not be unhappy with your bank.

2. If you outgrow the bank you’re with, move on. You may have been a customer for years, but your needs have changed, and these days it may not be as smooth as it once was. Maybe the bank ownership changed or the relationship managers you had moved on leaving you with without the friendly familiar service you enjoyed.

3. Don’t believe all promises advertised by a new bank product in a brochure. They are only telling you the good side.

4. Keep your old bank account for a while and only close it when you’re happy with the new one. Some customers find that the new bank is charging them for services they were getting for free at their previous one.

5. Negotiate with your current bank. They may waive some charges or make some changes, if you ask.

6 No one and no bank is perfect. Each bank has some positive’s, and also some negative’s.

7. The people who sell the product, are not the ones who will service it. When shopping for a new bank or product be wary if the person selling it is an agent on commission, not an employee of the bank. What they promise may not be delivered as you understand it.

8. Ask about all charges for the new service – Joining fees, admin/maintenance fees e.g. there may be an upfront 5% on your investment which is taken out before you account is event credited, and if that happened every year, you will not grow your investment much.

9. This is the era of mobile & internet. You should be able to view and query your accounts online – and this should be at no cost (it’s always cheaper for the bank to give you some account access, than you having to go to the branch to ask for a statement)

10. Read the fine print before you sign. You may be desperate, but take a few minutes to query some clauses, and it it’s a loan or investor agreement, ask to read it overnight, and get some legal advice.

Kenya’s best & worst loans & mortgages

The interest rate is only one component of a loan and last week the Central Bank raised  its’ base rates which should lead to more expensive loans for borrowers in the coming weeks.

Now, Jijini Markets have released their latest monthly report on they call the best and worst bank loans and mortgages in which they rank consumer loans, business loans, asset finance and mortgages by the interest rates that various banks are charging.