Safaricom’s MPESA mobile money transfer service is by far the most successful product of its nature in the entire world, the mobile service provider has since earned billions in revenue mitigating diminishing returns in voice and data. But the danger has always been there, several threats to the very existence of the mobile money transfer service have emerged from various corners including regulations that at some point aimed at having the service become independent from Safaricom. And even with an obviously successful environment and a somewhat uncertain future, Safaricom is looking to tap more opportunities from the service by introducing an insurance, unit trust and savings product.
The company has applied to various authorities in the country for necessary approvals to unveil a unit trust, insurance and a savings product as it looks to reap more from MPESA operations. It launched three different products on a beta basis dubbed Bima – for insurance services, Mali – form of mobile savings plan and a unit trust investment product. If in fact these products are unveiled to the public, the telco will have enormous access to lucrative sectors that have been dominated by traditional companies with full of all sorts of opportunities.
According to the reports we currently have, the operator has submitted approval requests to necessary government bodies including the Capital Markets Authority (CMA), Central Bank of Kenya (CBK) and the Insurance Regulatory Authority (IRA) to start offering these services on a commercial scale in the country. This development is viewed by many as a way to transition the MPESA service from just sending and receiving money to include services like insurance as well as wealth management.
After experiencing a slower growth in traditional telephony services like data and voice, the telco is shifting focus to maximizing opportunities within MPESA as a strategy for its anticipated future growth. The current market is saturated by different companies offering data and voice services at very competitive rates than what Safaricom is offering. This has made it almost impossible for the company to grow its revenue without heaving depending on MPESA.
According to Safaricom’s Chief Executive Officer Peter Ndegwa, the company is looking to tap into MPESA’s 26.7 million active customers that make transactions amounting to about Ksh. 1.5 trillion every month to push adoption of its upcoming savings, unit trust and insurance products. But the telco is also keen to get approvals first before announcing the new services.
Mali
Mali -Safaricom’s savings product is expected to offer interest rates on deposits of up to Ksh. 70,000 on a pilot basis. The product is already being tested as from December last year. According to industry analytics, the telco is aiming at having a majority of untapped Kenyan on its platform. As an example, 10 percent interest rate is way better than what banks are paying on savings, making it more lucrative for millions of low-income earners in the country.
Unit Trust
We currently do not have sufficient information on the expected unit trust product from the company, although it has indicated it’ll seek partnerships with firms already licensed by the capital markets authority.
Insurance
The mobile service provider is also looking to tap into the lucrative insurance sector by utilizing technology and data analytics to determine consumer behavior and ultimately bring onboard majority of uninsured Kenyans.