"If we are going to provide mobile services for customers,we need access to SIM Cards.Whoever controls the SIM card controls the ecosystem."~ Mr John Stanley-Equity Bank, head of mobile money.
Mkesho was the catalyst to the current battle we are witnessing pitting Safaricom and Equity bank over a new SLIMSIM technology being deployed by Equity bank.The Mkesho solution which was a partnership between the two companies exposed a lie that is MPesa.
Since its inception Mpesa has been touted as a money transfer service, even the regulators treated it as such, but the truth was most Kenyans were using it as a savings account, most of them still do.Before M-Pesa ,Equity Bank experienced rapid growth targeting the common man,but the entry of M-Pesa changed everything.
Both Mpesa & Equity bank have been fighting over the same customers.Equity bank in a way sees MPesa as encroaching on its turf.Even though most banks finally embraced Mpesa, the solution is still a threat to banks and with the rollout of Mswari that threat has become a reality.
The failure of Mkesho was blamed on a strategic failure by the two companies to structure a sound revenue sharing model which, not only made the solution a little expensive to its target customer due to double transaction fees, but also created suspicion between the two. Mr Michael Joseph was once quoted in a book “Money, Real Quick: The story of M-Pesa.” As saying
“There was a lot of suspicion between the two companies; the revenue we made on M-Kesho had to be 50-50. If they made more than we made, we had to get another costing pricing formula.”
There were also other reasons fronted as causes for Mkesho failure such as, sabotage by safaricom agents who saw the solution as a threat to their business, failure by the two companies to offer adequate training to their agents and a lengthy bureaucratic procedure that not only increased the cost of the solution through also hampered registration and adoption.
The truth of the matter was that the Mkesho solution was a threat to Safaricom. Equity bank was posed to cannibalize Mpesa market and threaten a growing revenue stream for safaricom. Equitybank’s quick deployment of the solution to its customers and the number of its branches clearly showed that the solution was more beneficial to Equitybank than to safaricom and the competitive advantage safaricom had in terms of Agents distribution was likely going to be threatened if Equity was going to roll out its own agents.
The launch of Mswari which is a partnership between CBA and Safaricom shows how Mkesho, although a fantastic solution, was viewed by safaricom. Mswari is a complete copy of Mkesho but they differ in terms of bureaucratic requirement .The solution makes CBA totally dependent on Mpesa and its agents.Mswari is a synergistic partnership that does not threaten any of the partners.As opposed to Mkesho, Mswari is totally dependent on Mpesa agents making it a perfect product for safaricom.
After the failure of MKesho and an apparent affront by Safaricom on Equity bank' turf through Mswari,Equity Bank through its telecoms subsidiary, Finserve got a Mobile Virtual Network Operations (MVNO) licence and is currently awaiting the roll out of SIM cards bearing "0763xxxx" prefix. which will take on Mpesa head on.The company also intends to deploy the SLIM SIM card technology that will make it easy for users to access their services without a need to acquire a new phone.Safaricom has launched a complaint with Communcation Authoriy of Kenya (CAK) to try and block Equity Bank's SLIM Card deployment arguing it will interfere with its network.
It is apparent we are going to witness a battle royale once Equity Bank deploys its money transfer service.Mpesa dominance is going to be tested and eventually competition in this sector will benefit the industry and open up the country to more innovation.