NAIROBI, Kenya 0ct 6 – Equity Bank is working on developing a new business model based on partnerships with service and product providers to grow its numbers.
Equity Bank Chief Executive Officer James Mwangi said on Wednesday the new model is aimed at responding to the different needs of Kenyans by providing and facilitating access to financial services at their level.
“The essence of partnerships is as a realisation that Kenyans make different choices. So we are saying can we go to Kenyans and respect the choices they make but enable and empower them wherever they are,” Mr Mwangi said.
Already the bank has partnered with institutions such as Safaricom, National Oil and Multichoice to advance loans to their customers to enable them access goods and services.
Mr Mwangi said the move is geared towards responding to the agent-banking model that was introduced into the country earlier in the year.
The Central Bank has already licensed close to 5,000 institutions to act as banking agents.
The CBK has also authorised Equity Bank and Kenya Commercial Bank (KCB) to roll out agent networks as it processes applications from other banks.
“The agency model is down there. People can access money or loans but there might equally be a shop or petrol station next there. So what we want is to interface that convenience so that people no longer have to come to Nairobi,” he said without giving a clear indication when the bank intends to roll out the service.
Through this system, financial institutions can appoint agents who can be retail stores such as supermarkets, chemists and postal outlets to conduct business on their behalf.
Mr Mwangi said the progress would significantly reduce the cost of doing business for banks, which will in turn make their services affordable and accessible to the un-banked.
The model is expected to allow non-banking institutions to offer financial services to the un-banked especially in rural areas where it remains commercially unviable for banks to run branches.
He was speaking during the signing of a partnership with Telkom Kenya for the financing of mobile handsets and laptops.
Through the deal, Telkom Kenya will provide the devices at Orange branded shops across the country while Equity will finance the acquisition. Equity will provide loans for mobile handsets worth between Sh2000 and Sh40,000 and laptops ranging from Sh30,000-Sh70,000.
Interest on the loans will be charged at between 3-14 percent depending on the type of account held with the bank.
Telkom Kenya Chief Executive Officer Mickael Ghossein said the move aims at increasing the level of internet penetration in the country by providing access to internet-enabled devices.
“Only 3.6 percent of the Kenyan households have a computer while 63.2 percent own at least a mobile phone. In our estimation, the ownership of mobile phones with internet access could be much lower,” Mr Ghossein said.