Equity customers to use phones for ATM withdrawal

Equity Bank chief executive James Mwangi during a briefing at the lender’s Upper Hill offices in Nairobi July 30, 2014. PHOTO|DIANA NGILA
Equity Bank chief executive James Mwangi during a briefing at the lender’s Upper Hill offices in Nairobi July 30, 2014. PHOTO|DIANA NGILA 

Equity Bank customers will only need their phones to withdraw money from automated teller machines (ATMs) once the lender issues its new SIM cards.

The lender partnered with telecommunications firm Airtel to acquire a Mobile Virtual Network Operator (MVNO) licence in April, which allows it to issue its own SIM cards for offering mobile banking services.

Chief executive James Mwangi said Wednesday that the licence would enable customers to transact without their ATM cards, in a manner similar to how M-Pesa subscribers withdraw cash from automated teller machines.

“Customers will withdraw money from an ATM machine without a card. Your phone will be your card,” said Mr Mwangi Wednesday during release of the bank’s half-year results.

The lender is awaiting the Communications Authority of Kenya ruling before launching its MVNO service, which will also see the bank issue paper-thin SIM cards that can be embedded on the back of ordinary SIM cards for non-Airtel subscribers.

Mobile operator Safaricom has protested to the regulator over the plans to use the thin SIM, saying the technology could expose users of its M-Pesa cash transfer and payments service to financial fraud and intercepted communication.

The new SIM cards will also have Near Field Communication (NFC) technology, which will convert customers’ mobile phone handsets into debit and credit cards that allow ‘tap-and-go’ at shopping points to pay for goods and services.

Equity said that it is in talks with American Express (AmEx) to certify its NFC-enabled SIM cards as a secure payment processing tool using globally accepted data security standards.

The Nairobi Securities Exchange-listed bank said that converting its SIM cards into point of sales as well as debit and credit cards is expected to halve transaction and operational costs.

Equity Bank has settled on the overlay technology where the thin SIM is superimposed on the subscribers’ primary SIM card to offer mobile services such as mobile banking, voice and data.

Mr Mwangi argued that the use of the thin SIM would give customers without smartphones an opportunity to convert into dual SIM phones with “near smartphone capabilities” without spending more to buy high-end devices.

“This will change the mobile banking terrain in this country. This is disruptive,” said Mr Mwangi.

The bank has already supplied the special SIM cards to its 7,000-strong workforce to test the service that would be later linked to its 7.8 million customer bank accounts in Kenya.

Equity has also migrated all its office telephone lines across its 162 branches in Kenya to its own mobile network. This has been done by keeping the employees’ and branch offices numbers but adding the prefix 0763.

The communications sector regulator is expected to make a ruling on the petition lodged by Safaricom by the end of next week.

“It is clear that with the thin SIM’s capability no single operator can guarantee the privacy of communication between the handset and SIM cards,” reads part of the protest letter signed by Safaricom chief executive Bob Collymore.

“The thin SIM is designed to attack the most essential component of the SIM card,” it added.