CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U, CBS
GOVERNOR
CENTRAL BANK OF KENYA
during the
LAUNCH OF FAMILY BANK LIMITED MOBILE BANKING
SOLUTION
Kenyatta International Conference Centre, Nairobi
December 5, 2013

Mr. Wilfred Kiboro, Chairman, Board of Directors, Family
Bank;
Mr. Peter Munyiri, Chief Executive Officer, Family Bank;
Board Members present;
Management and staff;
Distinguished Ladies and Gentlemen:
It is my honour and pleasure to join you this morning to
formally launch the Family Bank enhanced Pesa mob! mobile
banking solution. Before making my remarks, let me take this
opportunity to thank the Directors and the Management of
Family Bank for inviting me to make the keynote address at
this auspicious event. The launch of the enhanced Pesa mob!
solution is an important technological innovation that will
play a critical role in driving financial inclusion. It will
extend to both Family Bank customers and non customers to
open virtual accounts with Family Bank and is expected to
bring in a significant proportion of the unbanked population
into the formal financial sector.
Ladies and Gentlemen; financial inclusion is an important
aspect of Kenya’s development agenda. Kenya’s development
blue print, Vision 2030, covering the period 2008 - 2030,
envisages the financial services sector being transformed into a
vibrant and globally competitive sector that will drive high
levels of savings to finance the country’s investment needs. The
transformation entails doubling deposits mobilization from
44% to 80% of GDP and enhancing growth of savings
channelled into productive investments from 14% to over 30%.
This goal can be achieved by addressing the financial sector’s
visions objectives of enhancing financial system stability,
efficiency, and expanding financial access and usage.
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Under Vision 2030, there are medium term plans (MTP) set out
in a series of five year plans. The first MTP was implemented
between 2008 and 2012. The Second MTP (2013 to 2017)
outlines the specific policies, programmes and projects that the
Government intends to implement during the five year period
in order to deliver accelerated and inclusive economic growth,
higher living standards, increased job creation and enhanced
agriculture, among others. Specifically to the financial sector,
the second MTP undertakes to encourage savings mobilisation
and improve resource allocation to key growth sectors.
Ladies and Gentlemen: the advent of mobile-phone financial
services (MFS) in Kenya, since 2007, has played a critical role
in meeting the objectives of Vision 2030, particularly
enhanced access to financial services. Banks, like Family Bank,
have increasingly embraced such alternative delivery channels
to advance financial inclusion. As a result, the financial
system is now offering an increased and more diverse range of
financial services and products to more Kenyans, covering a
wider geographical spread, and even going beyond Kenyan
borders.
The recently released FinAccess Survey, 2013 bears witness to
the gains made in enhancing the reach and coverage of
financial services to Kenyans. It showed that the proportion of
the adult population using formal financial services rose to
66.7% in 2013 from 27.4% in 2006. The proportion of the
financially excluded on the other hand has steadily declined
from 39.3% in 2006 to 25.4% in 2013. Further, the proportion
of the population using informal financial services has
declined from 35.2% in 2006 to 7.8% in 2013. Most telling is
that the use of MFS has more than doubled from 28% in 2009
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to 62% in 2013 implying a direct contribution of the increased
use of MFS to the increased access to financial services.
Ladies and Gentlemen: Besides this unprecedented growth, we
have witnessed increased competition and diversity in the MFS
space with more telecommunication companies launching
mobile money products and commercial banks increasingly
partnering with telecommunication companies to offer
financial services. The emergent competition has and continues
to ensure cost-effective and efficient service delivery for the
benefit of the majority of Kenyans and MSEs previously
experiencing a dearth of financial services.
As we develop the MFS platforms, there are critical policy
issues that we will continue to address regarding competition
and exclusivity, interoperability and consumer protection,
among others. We acknowledge that interoperability must be
market driven, so that it can be most beneficial for pushing the
financial inclusion frontiers forward. We will provide the
necessary administrative back-up. At the same time, we
encourage the practice of non-exclusivity amongst market
players. We also acknowledge that consumer protection is
critical in the financial inclusion equation to ensure that
clients receive quality services without their consumer rights
being infringed upon.
Ladies and Gentlemen: To address these policy issues:
The Central Bank issued revised prudential guidelines
which came into effect on 1st January 2013. These
guidelines include new consumer protection guidelines that
provide guidance on information disclosure, dispute
resolution, fair treatment and customer awareness, among
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others, to ensure that consumers are aware of their rights
and duly protected.
The Central Bank is also on the verge of issuing the National
Payment System Regulations for the implementation of the
National Payment System Act. In an effort to encourage
interoperability of payment systems, we have expressly
provided for participants in the payment systems to operate
open systems capable of becoming interoperable with other
payment systems in the country and internationally. This is
intended to save on cost and duplication of systems.
In the same vein, the Central Bank has proposed in the
Regulations that payment participants should share retail
agents. This should however take into account establishment
costs incurred by participants whose agents are to be
contracted by other participants. It is envisaged that through
a management body to be established under this regulatory
framework, participants will agree on modalities on how to
cost effectively share agents.
Ladies and Gentlemen: The development of the financial sector
and enhancement of financial inclusion cannot be realized
without collaborative efforts of both public and private sector
players. The market participants have a critical role to develop
products that are required by its segment of the market. The
regulator on the other hand as a development agent will
develop instruments and initiatives to help the market develop.
In this regard, I acknowledge the partnership between Family
Bank and its telecommunications providers for introducing
innovative solutions into the financial system that has seen
increased mobile phone participants. Your strategy to leverage
on technology will continue to stimulate the growth of overall
financial services in the industry.
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The product being launched today: PesaMob will enhance
financial deepening and inclusion of the unbanked and
under-banked as well as provide convenience to existing
customers. I am informed that the product will do this through
its key mobile phone-centric characteristics which are:-
Convenient and secure access to funds anytime through over
115 ATMs and over 1,000 agents of Family Bank.
Ability to transfer money to M-Pesa and vice versa.
Payment of goods and services from merchants countrywide.
Purchase of airtime.
Access to banking services on a 24/7 basis.
I congratulate Family Bank for the continued commitment to
ensuring that financial services are available to all at an
affordable cost which has a positive impact, making financial
services accessible and the development of our country.
It is now my distinct honour to declare the Family Bank
PesaMob! Virtual Bank officially launched.
THANK YOU
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