CUs Catch Mobile Wave
Last October, I was in Kenya with World Council of Credit Unions representatives. As I bounced along a rural road outside Nairobi, two of my Kenyan traveling companions had this conversation:
“I need money for lunch and gas.”
“How much do you need?”
“About 5,000 bob” (slang for Kenyan shillings; about $60).
As the man doing the lending reached into his pocket, I fully expected him to produce a wad of bills and peel off 5,000 bob. Instead, he pulled out his cell phone, punched in some numbers, and put the phone back in his pocket. A moment later, the borrower’s cell phone beeped. He pulled out his cell phone, pressed a couple numbers, and the transaction was complete.
“Asante sana” (thank you very much), said the borrower.
“Starehe” (you’re welcome), said the lender.
“Wait a minute. What just happened?” said the American onlooker.
This was my first exposure to a financial transaction between two people using cell phones. It’s a common occurrence in Kenya and other parts of the world, but relatively rare in the U.S. They explained to me how person-to-person financial transactions work in Kenya.
The Kenyan financial infrastructure is more standardized and homogenous than the U.S. system, and Kenya doesn’t have as many “owners” of its electronic funds transfer network. Nor is the regulatory maze as circuitous as it is in the U.S. So it’s easier to roll out new electronic services in Kenya than it is in the U.S.
But the U.S. is lumbering forward and starting to catch up. The growing popularity of smart phones is helping to create a tipping point that’s triggering the widespread adoption of mobile banking services.