Transport

Banks up race for diaspora remittances business

EA-WesternUnion

A customer at a Western Union outlet in Nairobi. The amount of cash sent back home by Kenyans living and working abroad decreased marginally in September. PHOTO | FILE |

The money transfer logistics is set for radical transformation as commercial banks battle to control how 600,000 Kenyans living abroad send hard currency worth billions of shillings to businesses and relatives back home.

The local banks are racing to upgrade their money transfer platforms in latest signals of fierce battle ahead with established international brands after diaspora remittances hit Sh1.3 trillion last year.

READ: Kenya diaspora inflows hit high of Sh130 billion

Nearly all the local banks interviewed by Shipping & Logistics invariably regard money transfer as the next growth area with individual firms planning products to compete with established international brands like MoneyGram and Western Union.

At the KCB Group, which has so far relied on an online infrastructure of VISA and MasterCard, officials are planning to launch a mobile App from as early as next month.

“The KCB Mobile App will integrate with iBank to ease transactions, effectively allowing bill payments, bank transfers globally and transfer to M-Pesa worldwide,” says KCB head of diaspora banking Vincent Aberi.

The lender hopes to lure more Kenyans living abroad with the app’s interactive features that give access to stock information and performance of listed companies, property prices and daily news update on what’s happening back home.

“This app will transform the way the diaspora interacts with people and businesses back home”, said Mr Aberi. “Our vision is to provide seamless transactional prowess to people living in the diaspora.”

The move comes hardly a year after Equity Bank launched a low-cost online multicurrency platform dubbed Equity Direct, with a target of controlling at least 30 per cent of diaspora remittances to Kenya.

The product launched in partnership with UK firm VFX Financial, charges between Sh140 (£1) to Sh560 to move up to Sh13,900. Europe as a whole accounted for only 27.3 per cent of the last year’s remittances.

To achieve its target volume, the service has to expand beyond UK to regions like North America which currently accounts for 47.4 per cent of the annual diaspora remittances to Kenya.

The path being taken by these banks is expected to up stakes in the bid to control how Kenyans abroad send money back home. Commercial banks that initially appeared content just receiving money channelled into their systems by brands such as SWIFT are coming up with internal products for money transfer.

Under this set up, the Family Bank launched its Daima Mkenya brands in September 2012 under which it has been operating current and mortgage accounts targeting Kenyans living abroad.

But as more non-bank players like Nation Media Group’s Nationhela and Safaricom’s M-Pesa gain footing in the money transfer logistics, more commercial banks are moving to frontline positions.

Ecobank has developed a low-cost product called RapidTransfer (RT) hoping to cash in on President Uhuru Kenyatta’s Africa-focused diplomacy to grow its chunk of money transfer businesses.

The RT enables traders to send and receive up to $10,000 (Sh916,000) at one go within Kenya and across 34 other countries of Africa where Ecobank has branches.

“RT will soon be available on our e-channels (retail Internet banking, mobile app and prepaid card). This will increase customer flexibility hence making it more convenient,” says Ecobank Kenya remittances and diaspora manager Robin Wangombe.

Though initially launched for account holders, the RT is now available for non-customers ­­— mainly businesspeople and students who make and receive instant payments within Kenya and across Ecobank’s branch network of 1,200 within Africa.

“We were transacting just about $35,500 (Sh3.3 million) per month when we launched this product five years ago but this has since grown by over 2,600 per cent in comparison to our inflows and outflows for November 2014,” said Mr Wangombe.

“We expect the uptake to significantly grow in the coming years as African countries increase the volume of trade amongst themselves and as the regional economies expand.”

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