Mobile services are expanding to meet improved demand for electronic banking in Kenya, though some obstacles remain, say users and vendors.
With more people accessing the Internet and mobile phones becoming affordable to everyone, banks have developed products to suit the market, said James Muchiri, director of technology and operations at NIC Bank.
NIC has developed services that allow customers to send a SMS (Short Message Service) from their phones to buy airtime, pay utilities or check balances. Another online service that the bank is implementing permits companies to clear their salaries and do normal transactions without going to a bank.
Banks are integrating their systems through technology provided by software vendors like Fintech, which serves financial institutions in 18 African countries.
As more people subscribe to GSM (Global System for Mobile Communications) services and access the Internet, banks have been forced to build their software around online services and through the mobile phone, said Paul Mbugua, general manager of Fintech.
According to the Kenyan national economic surveys for 2008, Internet usage has risen to 4 million from 2.5 million in 2007. The survey also indicates that 11.4 million Kenyans, about 33 percent of the country's population or 70 percent of adults, own mobile phones.
Because most banks in Kenya have heavily invested in old applications, Fintech provides an interface that allows legacy system integrations. Fintech applications also allow bank customers to use SMS as well as online services.
Fintech software accesses legacy systems through APIs (application programming interfaces), providing online services and does not manage the back-end database and tables.This limits customer information available on the service applications.
Fintech applies ISO (International Standards Organization) code but allows banks to customize the user interface, letting them, for example, choose the language or abbreviations applicable to the services. For instance, a specific ISO code is always associated with balance inquiry, however the bank has the liberty to decide what abbreviation a customer can use to send an SMS and get the account balance.
While the services may have improved access to banking systems, there are several challenges. The charge for the SMS to the bank is usually higher than an ordinary text message. This is because a majority of the banks have not developed a large user base to justify discounted SMSes from mobile service providers. This means they pay the normal costs to the mobile phone company, and they add their costs. A normal text message costs 3.50 Kenya shillings (US$0.06), so the SMS to the bank costs 7 shillings, though it varies by bank.
Pamela Achieng uses the SMS service provided by Equity Bank. She has no problem with the cost but feels that at times the SMS takes too long to respond.
Fintech's Mbugua said that the SMS service can seem slow but diagnosing the problem is difficult because of the message process' many steps. The message is first sent to the phone company's servers, then to the bank servers and finally goes through a modem that decodes the message for the computer interface. Then a response has to be sent back.
To make the process faster and more efficient, Mbugua said all banks should connect to one common server on a P-to-P (peer-to-peer) network, meaning that the main connection will be between the mobile company servers and the common server.
However, NIC's Muchiri said that the bank seldom receives such complaints and always alerts the mobile phone companies about such issues.
Kenya also has Internet connectivity problems. Internet browsers can take too long to load a page, and sometimes the process ends before completion, which has made many Kenyans fear online transactions.
"With the Internet, you may not know whether the transaction has gone through or not. Sometimes the Internet is down for 10 minutes, it is not safe for now. I am more comfortable using SMS," says Achieng.