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

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

PesaLink Kenya Bankers AssociationLast 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.

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Eric writes on business, govt policy and enterprise tech.


  1. Unified payments is the way to go. On the matter of being charged to send and withdraw. You need to understand enterprise platfotms run on license and further that agents need to be paid and most important of all the service provider needs to make a profit.

    • Agreed. In any case, the discussion cannot be one of price given that Airtel money is free and they are shedding jobs left, right and center.

    • It is true the agents need to be paid. But why charge for sending surely? This is money that remains with Safaricom. If Safaricom does not charge you for receiving money from CBA’s mshwari and KCB’s KCB mpesa, why charge me for ending money to another mpesa number?

      In fact, CBA and KCB we know the political family that has huge interests on these two banks. Perhaps, they also have interests in Safaricom, which makes these banks receive preferential treatment over other banks.

      That is why Safaricom killed MKesho (despite even charging you for sending and receiving money between mpesa and your equity bank account).

      Equitel is a great service that at one point Safaricom really tried to sabotage with the termination fees.

      • Did you know agents are paid everytime you deposit? While the customer is not charged. How does safaricom deal with that liability?They charge a premium on sending money to recover that commission. Additionally when sending money resources are used: license fees on software, hardware and utilities, human resources from customer care desk, technical support to hr itself. When you process 5million send money transactions a day you need to charge for it due to significant overheads incurred to process and facilitate such an operation.

  2. Banks as usual are missing the mark. They are re-inventing the wheel, targetting the same people they already have. For the customers to enjoy the services, the prices must come down drastically. The people they should be targeting are the unbanked, that have access to phones, the people that M-PESA and Equitel have been serving. I am sure the idea is to fight craft silicon’s system that had been in use by over half of the banks in Kenya. Maybe they are jealous of Equitel. I think its high time they concentrated on their core business of providing competitive financial services and leave technology to the tech companies. They are competitors, and they don’t like each other

    • I love your statement, targeting the same people they already have. I’m guessing that the banks will continue selling to their own in-house customers using their existing brands. If this is the case, Bob & Co will not lose any sleep.

  3. The banks had not promised a solution to those “pressing financial services problems” that you refer to… I see this as banks fixing some serious gaps that have made them uncompetitive and slow in the past.
    whether this already covered by m-pesa is not the question.
    Infact mpesa needs competition.
    –Real-Time transfers from one bank account to another is a huge step for banks, though late in the day
    –Mapping a phone number to an account or several of them is a huge thing

    and as they have indicated that they are launching with only a P2P product for now.
    the scope is much larger, I am expecting that solution where pesalink will integrate agents to their network. enabling Agent to Person and Person to Agent transactions. The effect of this will be a unifying all agency networks of the respective banks in the country.

    Since banks are already trading alot cash, this presents the best cash of real competition to mpesa, if well marketed and executed.
    with competition will come innovation.

  4. Banks would have done better by sitting down with Safaricom (I’m intentionally excluding Airtel coz they don’t seem to be serious about their business anyway) and renegotiating on the best way to accomplish Inter-bank transfer, at lower cost with all parties – especially consumers – able to see the value in the service they develop.

    They need to stop seeing MPesa as their enemy 100% of the time, instead use each other. Maintaining the mobile infrastructure is not easy business. The fact that we are dealing with sensitive information ups the risks even higher. – they will realize the real cost implications in the next 2 years.

    • Safaricom is not a company to sit down and discuss anything with. They want everything their own way and that is why they killed mkesho because they want to hoard every coin. The feel like they own Kenyans and banks are merely jealous of their reach and want to take advantage of them. Such altitude in my view has made safaricom reach what i call innovation menopause. Consider the latest product flex bundles. They want customers to pay tooth and nail to get a negligible benefit. They tried the same trick with the big box and kenyans are way too smart for that. Another product which will fail is “business ready stuff”. The pricing is not realistic. Those three cases demonstrates that safaricom has nothing new to add to Kenyans and that is why it must be declared dominant and split into several companies. Until recently, the quality of calls coming or going into equitel was poor, in what i believe was deliberate sabotage. Is that the company we Kenyans want? Hell no.

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