Stepping into the mobile overdraft services arena, Equity Bank has launched a real-time facility that enables borrowers to top up to Sh100,000. This strategic move directly challenges Safaricom’s Fuliza and Faraja products and epitomizes the bank’s commitment to enhancing financial inclusivity. It seeks not only non-conventional markets but also taps rigorously into conventional ones.
Customers can now enjoy the flexibility of the newly introduced overdraft facility, allowing them to supplement their funds with an amount as low as Sh100 and up to a maximum of Sh100,000. Although specific terms and conditions have not been fully disclosed yet, one insider revealed that this plan for repayment offers versatility: it can extend over a period of 30 days. Furthermore, borrowers have the choice, if they wish, to repay their borrowed sum before reaching that stipulated 30-day deadline.
Equity Bank is committed to providing a seamless and user-friendly experience for its customers by streamlining the application process. Through their mobile app, Equitel line, or by dialing *247#, customers can conveniently access the overdraft facility. This versatile service supports transactions on multiple platforms, including Paybill, Till, and person-to-person interactions.
Equity Bank’s action mirrors the partnership of EDOMx Ltd, a Kenyan fintech firm, with Safaricom in implementing Faraja which is an innovative zero-interest credit service empowers customers to make purchases anywhere from Sh20 to Sh100,000 and provides them with a 30-day repayment period. Through this system, businesses enjoy immediate payment facilitation by EDOMx.
Going forward, we anticipate heightened competition as Equity Bank ventures into the mobile overdraft arena, particularly with Fuliza, an offering from Safaricom that has recently grappled with difficulties. The first six months’ financial results from Safaricom disclosed a staggering 40% decline in earnings for Fuliza: Sh3.4 billion dropped to Sh2 billion this year, exemplifying the challenges it has encountered throughout its operation.
Various factors, such as a reduction in the average loan size and heightened competition from the government-backed Hustler Fund, attribute to this decline. The fund was introduced last year and has since disbursed up to Sh30 billion at an attractive annual rate of eight percent, thus offering borrowers a more affordable alternative.
Equity Bank strategically aligns with the broader trend in the Kenyan financial sector where institutions continuously innovate to meet evolving customer needs. The introduction of its mobile overdraft facility not only signifies a competitive edge for Equity Bank but also represents a positive step towards advancing financial inclusion in Kenya. As consumers anticipate an evolution within mobile financial services, they will experience more options and improved offerings catering specifically to their diverse fiscal requirements.