NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Kenya’s financial market has caught the world’s attention. The rise of mobile money in Kenya has become the interest of financial inclusion experts, the excitement of mobile network operators, and an opportunity for financial institutions to rethink their products and services. Last year alone, mobile phones transferred over 900 billion KSh (US $10 billion) representing almost 30 percent of the country’s GDP. However, the implications and transformative impact of mobile money and other breakthroughs on the bottom of the pyramid are often much less understood. Our new research study examines how Kenya’s rapidly evolving market has opened up to a wide range of new and dynamic players and looks at what this means for savings products available at the bottom of the pyramid.

The research compiles data on over 100 products from commercial banks, microfinance institutions, cooperatives, insurance and asset management companies, and digs into the details of interest rates, fees, and delivery methods to learn what is really going on in the financial market. In particular, three main findings surfaced:

First, mobile financial products are here to stay. Of the institutions surveyed in our research, 75 percent now use mobile phones to deliver their services. Financial institutions initially viewed the rise of mobile money as a threat, but as these services have solidified themselves in the financial landscape, savings providers are increasingly adapting to link and leverage mobile money services with their financial products. However, as further partnership occurs between mobile money services and banking services, technological integration and regulatory issues will become more relevant and central to progressing forward product offerings.

Second, commercial banks are paying attention and starting to make moves down market. Over the past five years, the number of deposit accounts with balances below KSh 100,000 (US $1,000) grew dramatically faster than those accounts with balances above KSh 100,000. Equity Bank, the largest bank by clients in Kenya, was at the forefront of this trend; of the 4.4 million accounts opened since 2006, 97 percent were smaller volume savings accounts.

Third, Kenya’s commitment to fostering and opening up financial data is paving the way not only for Africa, but proving to be a role-model for developing and developed countries alike. Kenya is the first country in Africa to launch a national open data initiative called the Kenya Open Data Initiative, and the Central Bank of Kenya is leading efforts for the country’s transparent development. These types of demand and supply side data are at the heart of identifying and addressing issues for the bottom of the pyramid and are fundamental to creating a comprehensive strategy for financial inclusion.

On Tuesday (May 22), join us at for an event as we launch the report as well as showcase more associated, interactive data visualizations from the Kenya context.