NAIROBI, Kenya, Nov 16 – The trend among financial institutions to share payment infrastructure and the roll-out of mobile technology is set to play a big role in the penetration of financial services in remote areas across the country.
National payments switch provider Kenswitch General Manager George Wainaina said on Monday that with many banks sharing Automated Teller Machines (ATMs) and Point of Sale terminals, many institutions would find it necessary to redeploy their infrastructure in the isolated areas.
“We are looking at rationalising the ATMs going forward so that ATMs that don’t meet their minimum breakeven transactions can be relocated to other underserved areas,” he said.
It is not uncommon to see, for example, more than five ATMs from five different financial institutions located on a single floor in a shopping mall. Mr Wainaina said this situation was illogical and that’s what the ATM rationalisation would seek to address.
He added that this increased network would not only lead to a reduction in the cost of doing business but also lower interest rates.
“If you have a situation where two banks have placed ATMs side by side where one machine would have sufficed, all the costs of having the ATM are carried by the bank and passed on (to the customer) as interest rates,” he explained.
“But if they are redeployed to other areas where they make money, then they do not have to subsidise that with interest rates and the rates can only come down,” he added.
The other benefit to be accrued from this initiative would be increased uptake of electronic payment system in the country and the region within the next few years.
“Despite the exposure and availability of other forms of payment, East Africa still remains a cash-based society. This has been mostly attributed to the non-availability of convenient and low cost distribution payment systems,” Mr Wainaina regretted.
He said Kenswitch was positioning itself to connect many sectors including mobile phone operators and Capital Markets players in a bid to add value to customers and revolution the financial payments.
To achieve this he disclosed that Kenswitch was working on modalities that would enable it to link transactions between the banking sector and mobile phone operators.
“Kenswitch will be seeking a second courtship in the area of interoperability- the tool that will enable a myriad of functions and operations from the mobile handset,” he said adding that once implemented, the move would widen the possibility of using electronic cards as a payment tool across the country.
Mr Wainaina spoke during the signing of a partnership with Kenya Commercial Bank (KCB) Group which will give the bank’s customers access to a myriad of banking services through the Kenswitch 650 ATM platform.
KCB Group CEO Martin Oduor-Otieno said their customers including those in countries they operate in would be able to withdraw up to Sh40,000 per day at a fee of Sh30 per transaction.
The same will apply to customers of Kenswitch member banks accessing their (KCB’s) ATMs.
The Group now becomes the 25th entrant into Kenswitch family which provides an array of financial services to 1.7 million card holders.
“Kenswitch and KCB recognise that the purpose of putting in place this large network is to meet customer needs much more efficiently and conveniently,” Mr Oduor-Otieno stated.
As part of the bank’s continued search for avenues through which they can serve their customers better, the CEO also revealed that they would launch the internet banking platform in the first quarter of 2010.