Does KBA’s Pesalink Really Solve Kenya’s Financial Problems?

PesaLink Kenya Bankers Association
PesaLink Launch by Kenya Bankers Association on Thursday | Photo: KBA

Last week, I came across an interesting tweet stating that most fin-tech solutions are in search of problems instead of fixing the current problems.



The financial services industry is currently witnessing massive infusion of technology which is disrupting the core of the industry in major ways. From lending to transfers and even payments, technology is changing the industry breeding convenience and dramatically lowering the barrier of entry.

Kenya has been at the fore-front of fostering innovation in the financial services industry. Mobile money transfer service M-Pesa has changed the lives of millions in Kenya by making peer to peer a center of our lives. Other additional options such as the ability to save funds in the M-Pesa wallet or even access credit have had a huge impact to millions.

Equity Bank launched Equitel in 2014 and through its mobile app, one can now open a bank account. Equitel, through its micro-lending services has been important in making it easier for small business owners to access credit for their business activities. One cannot also undermine the impact of lending apps such as Tala and Branch in financial inclusion.

This blog carried an article earlier today stating that the Kenya Bankers Association had finally launched their interbank mobile money transfer service called Pesalink. The launch of the service took place years after its initial announcement, it was meant to ensure that banks recapture a key segment of banking that mobile money transfer services had managed to overpower. PesaLink will be operated by Integrated Payments Service Limited (IPSL), a fully-owned KBA subsidiary and powered by the Kenya Interbank Transaction Switch (KITS).

The service will allow inter-bank transfers from one person’s account to another on all banks channels including mobile, ATM, Internet banking, Agency, Bank branches and Point of sale. Transactions will however take place via the mobile phone with the phone used to initiate transactions and users also receiving notification via their mobile devices. feels like the solution is aimed at one-upping the mobile money transfer service while there may be more pressing financial services problems to solve…

Back to the tweet, I am not really sure what problem the new solution by KBA is looking to solve. Frankly, it feels like the solution is aimed at one upping the mobile money transfer service while there may be more pressing financial services problems to solve especially regarding deepening financial inclusion. There is no denying that M-Pesa has dominated the market and any efforts to compete have failed to gain traction. At the same time, I think Safaricom should reduce the cost of transactions factoring in inflation and the laws of demand and supply. Again why are we charged for sending and withdrawing money?

While interbank transfer is an important aspect of the banking industry, I am afraid it fails to address some of the core problems facing most Kenyans. According to the IMF, Kenya’s unbanked population stands at 17%. This segment of the population requires to be addressed and the best way to approach would be through the use of technology. Instead of having banks invest in their own technology for the same, how about a solution that allows one to choose which bank they want to open an account from a list of listed banks?

Payments remains a largely untapped area in banking with cash accounting for 95% of all payments in Kenya.  Efforts aimed at digital payments continue to lag behind owing to lack of know-how and generally our own culture. I think KBA would play an important role in pushing Kenya towards becoming a cash-lite economy. How exactly? Through a concerted effort with the regulator and using similar technology that unifies payment regardless of the bank or even payment provider.

Access to credit for small and medium enterprises remains a big problem. There have been numerous reports stating that SMEs continue to face massive challenges in accessing working capital or even growth capital. Technology would easily solve this problem by firstly having a platform that allows one to easily borrow from whoever financial institution they bank with, with minimal requirements.

At the same time, foster efforts towards a unified credit reference system to make it easy for financial institutions to gauge one’s credit history (I believe this has already taken place). At the same time, KBA could ask members to annually create a pool of funds which will target SMEs and reduce the burden RE: access to credit. Remittance would also be an interesting point of focus.

All I am saying is kudos to KBA on the launch but am not sure your solution solves fundamental problems regarding financial services in Kenya.