Commercial Bank of Africa (CBA) and Safaricom are contemplating cutting the price of M-Shwari from the current 7.5 percent per month to withstand the competition from other similar players.
“The anchor price, which was put forward when the product was launched as a transaction charge of 7.5 percent, which is a facility fee with zero interest rate. When we begin segmenting we will be looking at reducing the facility fee to a number we hope could be below 7.5 percent,” said Mr. Awuondo when CBA kicked off celebrations to mark five years of the product in Nairobi.
In the recent years, there has been an increase in a number of players who are issuing mobile loans at a much lower rate than M-Shwari and the announcement by the pioneers is seen as a reaction to wanting to remain relevant in the market.
Majority of lenders have concentrated their loan services to mobile with Equity Bank Group through Equitel, Kenya Commercial Bank through M-Banking and Co-operative Bank through M-Cop Cash app. Co-operative Bank, for instance, issues its loans at a rate less than four percent.
Statistics available at Safaricom and CBA indicate that M-Shwari has disbursed 230 billion shillings since its launch in November 2012. The platform has also had 669 billion shillings worth of deposits from more than 20 million customers. On average, the platform receives 300,000 loan applications daily with between 70,000 and 100,000 customers being successful.
“Five years ago, we embarked on a journey into uncharted territory when we launched the first mobile-based savings and loans product in Kenya. The true measure of success for us has been in the impact it has had on the ordinary Kenyan. M-Shwari has provided a banking service that is convenient, accessible and secure that has proved to be a very relevant substitute to the informal savings and credit alternatives that were used across the country, before its launch. M-Shwari is another Proudly Kenyan innovation, that has now been rolled out to 4 other African markets, embraced by over 31 million customers,” said Isaac Awuondo, Group Managing Director, CBA.