Bankelele

Relief for Imperial Bank Depositors

Finally a breakthrough for depositors has been reached at Imperial Bank after 1.5 months of anguish:

Kenya Commercial Bank and Diamond Trust Bank will pay depositors of Imperial Bank their deposits, up to Kshs 1 million ($,9800) each. This means that 44,300 or 89% of the banks’ depositors will get their money within a few weeks at branches of KCB or DTB.
This comes as Imperial Bank shareholders have not accepted the government proposal that will allow reopening of the bank.
The support of the (DTB’s largest shareholder) Aga Khan Fund for Economic Development (AKFED) has been instrumental in reaching this agreement.

Diamond Trust: Fourth Rights

Diamond Trust Bank is back for a fourth rights issue in recent years from its 11,136 shareholders at a rate of (Kshs 165) $1.95 per share, with each shareholder entitled to buy 1 share for every 10 held. This follows others done in 2006, 2007, 2012 and now this one.

Contrasting the four issues

Year – Nov-06 ; Nov-07 ; Jul-12 : Jul-14

Target (Kshs M) – 735 ; 1,600 ; 1,809 : 3,631

New shares (M) – 15.5 ; 23.3 ; 24.4 : 22.0

Price (Kshs) – 50 ; 70 ; 74 ; 165

Ratio – 1:8 ; 1;6 ; 1;8 : 1:10

Budget (Kshs M) 41.6 ; 54.7 ; 57.6: 100.1

The IFC remains as a principal funder and shareholder for the bank.
Diversification has paid off with the bank having 30% of assets and 19% of profits from outside Kenya. While 77% of Diamond Trust’s $61 million after-tax profit is from Kenya, the Tanzania and Uganda operations contributed about $7 million each of profit with Burundi trailing at ~$150,000
They have extended traditional banking services in the mobile and card age by having M-Pesa at all their ATM machines. They also issue prepaid cards for NationHela, NakumattGlobal and MiCard and handle remittances/money transfer for WesternUnion, MoneyGram and XpressMoney
Other institutions that may need to have rights issues or raise capital this year include ABC, Commercial Bank of Africa, Consolidated and Equatorial banks.

Improving NationHela

Despite the ease of use, and convenience of Nation Hela as an online prepaid card and as a travel card, there are few challenges that need to be tweaked to improve the user experience for National Hela users.

Card Top Up

The only reliable way of topping up the card is by physically going to a Diamond Trust Bank branch. Agents of the bank don’t handle NationHela top-up’s and surprisingly, Safaricom’s M-Pesa – which would be the ideal way for millions of Kenyans to load a card – does not work all the time. It’s a hit or miss experience, with many phone calls having to be made to Hela at Diamond Trust to trace the date/time/amount of the M-Pesa transfer – only for that to be reversed.

Account Management

For now you can request for an abbreviated statement by SMS, as well as get an SMS each time you transact with the card in Kenya.

There’s also the NationHela site, where a user should be able to view a history of transactions, and do other functions like block a stolen card. But access to the site remains a challenge – at first it looked like another bank site that only works on Internet Explorer browser and a Microsoft Windows PC combination, but no matter the device tablet, mac, or PC laptop, access to the site is a challenge – with password characters not visible, password changes not reflected, pop-up’s (that are auto-blocked on many browsers due to spam) etc.

Easy of top-up and viewing transaction history are two essential user experience challenge points that need to be addressed, for the card to get wide acceptance.

Nation Hela to revolutionize remittances & debit cards in Kenya?

On August 15, 2012, Kenya’s Nation Media Group (NMG) launched NationHela in partnership with Diamond Trust Bank and Craft Silicon. NationHela had been first unveiled the previous week when NMG announced 14% revenue growth to Kshs 5.8 billion and a 23% rise in profits of Kshs 1.37 billion and an interim dividend of Kshs 2.50 per share for the first half of 2012.

Why NationHela? For NMG that has millions of online newspaper readers every month, a good fraction of who are in the diaspora, and who also send remittances to Kenya, the platform is a chance for them to send money without leaving their computer (or logging off the newspaper site) – by entering debit or credit card numbers to send to a Kenyan phone number.

At the launch, a Central Bank of Kenya a figure was cited of remittances of $590 million in the year to June (up from $409 million the previous year) through formal money transfer channels.

Senders also get value as NationHela can be 30% cheaper overall (charging $12.5 to send $200 compared to $15 for other services), while for the recipient it knocks out the necessity of taking a matatu (vehicle) to town or finding a Western Union agent to withdraw cash.

Diamond Trust who are the 7th largest bank, and the largest agent of Western Union in Kenya, handled the banking regulatory and approvals, and will also do the backoffice processing of money movement, agents, currency exchanges, float etc., while Craft Silicon provided the mobile interface (familiar to anyone who’s used their Elma) through which users will access Hela by USSD on a mobile phone to get notifications, send or receive money through mpesa to other card users, pay some utility bills, block a lost/stolen card, see a mini statement /balance among other features.

Some cited uses of the card include:

Make online purchases as a visa debit card
Move money to or from mpesa
Withdraw cash at any ATM via visa
Use the debit card in a supermarket to make payments

Other future or potential uses include:

Pay dividends straight to cards (maybe starting with Diamond Trust and NMG shareholders)
Kenyans with paypal can move their online money on to the card and cash out payments
Senders will also be able to see how card recipients use the money they have sent (perhaps answering along standing issue about the misuse of remittances.
Take NationHela to Tanzania and Uganda where both the Nation and Diamond Trust are
Pay staff travel allowances and imprest at companies (said to happen at NMG)

Outlook: Some concerns have been expressed, that NationHela may not work out, or that it’s going to distract NMG from its core media business. Also the web interface needs some tweaks to make the card easier to work.

While the awareness and usage of debit and credit cards in Kenya has been low, for NationaHela there are plans for online education & marketing campaigns targeted at the diaspora, combined with roadshows and town hall meetings around Kenya to register users, convert agents, and show how to use it on a day to day basis – and we’ll see where they are in a year.