njuguna ndung ’ u : mobile phone banking services in kenya address by prof njuguna ndung ’ u, governor of the central bank of kenya, at the launch of equity bank mobile phone banking service, nairobi, 3 september 2008. * * * mr. peter munga, chairman of the board of directors of equity bank ltd. ; dr. james mwangi, managing director and chief executive officer of equity bank ltd. ; board members here present ; distinguished guests ; ladies and gentlemen : i am delighted to be here this afternoon on the occasion of the launch of equity bank ’ s mobile phone banking service. today indeed marks yet another landmark event on equity ’ s chequered path. i am therefore grateful for the invitation to share in this occasion. let me at this early juncture commend the board, management and staff of equity on the introduction of the mobile phone banking service that i will be launching shortly. the service provides an eazzy 24 / 7 mobile phone banking solution to your customers as they shall literally be carrying their accounts in their hands ( “ benki yangu mkononi ” ). this is indeed a revolutionary solution that will provide the following four key benefits : 1. convenience : the launch of mobile phone banking is a step towards making financial services accessible to all kenyans who have access to a mobile phone. this is a revolutionary mobile solution that delivers mobility, convenience and security to the bank ’ s existing as well as prospective customers. it will leverage on the strong mobile penetration both locally as well as globally and essentially the affinity of mobile devices to the consumer. customers will be able to generate value from wireless transactions anytime anywhere. 2. banking the unbanked : with 11 million kenyans having access to a mobile phone, and only approximately 4. 5 million banked, the new solution offers an avenue to push forward the access frontier in kenya. this effort will bring more kenyans into banking solutions. 3. beyond banking ; financial solution : this banking solution will allow for the use of a mobile phone to perform various other services beyond funds transfer. customers will be able to pay for services, manage their accounts, provide airtime top - ups and execute other service requests. 4. opening new economic frontiers and supporting vision 2030 : this service will contribute to economic expansion for kenyans, especially the small and medium enterprises. by accessing financial services easily and affordably, kenyans will be better equipped to support their enterprises. the

to make clear what now you do not know. ” i offer some reflections on the way forward. it is important that innovators and financial service providers listen and understand the concerns of their prospective customers. this will generate a wider range of appropriately - designed financial products, based on customers ’ diverse needs and characteristics. these services will also need to be affordable by low - income households and vulnerable groups, and the consumers should also benefit from reduced marginal cost of additional digital financial services, as provided by the underlying technologies. going back to the example of art, the benefits of the artists ’ innovations would be felt more widely if more people can see and enjoy these masterpieces. in light of the successes in improving financial inclusion, more attention should be given to expanding financial services in the lagging areas. of particular importance is the extension of financial services to smes, women, and those living on us $ 2 to 5 per day ( the cusp group ). the latter group of consumers represent 23 percent of the population in sub - saharan africa, comprising of economically active persons in both the formal and informal sectors who lack meaningful assets and remain vulnerable. as an example of such targeted financial services, kenya will allow the public to purchase government securities through their mobile phone money transfer services, with a minimum investment amount of us $ 30. this will be transformational — in addition to promoting financial inclusion, it will strengthen the population ’ s savings culture and ultimately lead to an increase in national savings. standardization of technologies will likely yield benefits in the short term, but this should not be allowed to stifle the emergence of new technology. technological standards support the production process and market penetration of products, and thereby has a significant effect on innovation, productivity, and market structure. however, coupled with dominant leaders in the industry, this would increase considerably switching costs and network effects, and conflicting with the long - term objective of greater market access with evolving technology. innovations need to deal adequately with the risks arising from these financial services. the most significant risks currently relate to cybercrime and data privacy, even as customers navigate a landscape strewn with hidden risks. a number of other consumer protection concerns have also emerged, including : the lack of safeguards for funds held by non - prudentially regulated providers ; limited disclosure of fees, terms and conditions ; insufficient agent liquidity ; irresponsible lending through the digital channels ; and unclear or limited recourse in case of disagreement with the provider. what is clear