The Triumph of the Mobile Banking System M-Pesa over its Competitors in Kenya

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This paper aims to look into banking situations in Kenya and how M-Pesa, a mobile banking system, has triumphed over them. Over the years, Kenyans have depended on typical banking procedures to deposit, save and withdraw their money. However, since 2008, this has changed, thanks to the advent of mobile banking, M-Pesa. This is a banking service offered by a telecommunications company, Safaricom. Safaricom is the most popular network in the country. M-Pesa is quite a manageable service since all a customer needs is a form of identification and a Safaricom SIM card. M-Pesa has integrated most of the ordinary banking services so that it is much faster and more convenient. In other words, it is banking at your fingertips. This new technology has seen great competition between banks and M-Pesa. Banks are struggling to maintain their relevance in the market by mainly trying to mitigate the potential influences of M- Pesa. In this paper, I will focus on an individual bank of my choice which is the Family Bank.

Company Background

Family Bank was started in 1984 as a Family Finance Building Society Limited (FFBSL). This was mainly to focus on the previously unbanked and poor citizens of Kenya. However, in 2007, it converted into an entirely fledged bank. It is a commercial bank currently offering banking services to individuals, businesses, and corporate groups. Its product ranges include savings, investing, loans, smart card banking, and other e-marketing services. Family Bank is currently a privately owned entity seeking to expand its branch network globally. As of 2011, Family Bank's revenue stood at KES 35 million, while its assets totaled KES 26 billion. So far, Family Bank has managed to establish itself in the banking sector and has acquired its niche in the market.

Challenges Encountered

With M-Pesa services, the family bank has found itself losing its clientele. This is because M-Pesa is so popular throughout the country and quite convenient. Most people are not thrilled with the issue of queuing in banks to deposit or withdraw money since a lot of time is wasted making unnecessary queues. There are also a limited number of ATMs which still inconveniences people because there are also queues at ATMs. The basic banking service of deposit and withdrawal is thus enhanced by the establishment of M-Pesa. Due to its popularity, there are several M-Pesa agents countrywide, thus making banking efficient. M-Pesa is also affordable and accessible to all and sundry, including the poor, who find it hard to open a bank account by cutting costs on ordinary banking services. M-Pesa also reduces the risk of carrying cash which is among the latest significant security measures to be developed and effectively function.

The existence of M-Pesa is a huge hindrance to Family Bank because its lending capacity of loans is reduced. i.e., the money that Family Bank could have used to offer loans to people is minimized since most people conduct their basic banking transactions via M-Pesa. That money is thus redirected to M-Pesa instead of finding its way into Family Bank. The selling of checkbooks is also rendered obsolete since they are barely needed, and most people no longer trust cheques. A deposit into one's M-Pesa account is much more credible than the issuance of cheques. The transaction charges of Family Bank are also high compared to those of M-Pesa.

SWOT Analysis of the Company's Condition


Family Bank is in a position to give loans to its customer since this is among the basic services offered by a bank. Nevertheless, this is unlikely for M-Pesa. Family Bank can also give interest on the money deposited, while this is an implausible feature for M-Pesa.


There is the redundancy of work at Family Bank because the Existence of M-Pesa is reducing the workload in banks, thus rendering the human services at the Bank unnecessary. On the other hand, M-Pesa is creating jobs for standby agents. It is difficult for the family bank to reduce the costs of their services since that is what generates their revenue. This continues to be a turn-off for most potential customers who would rather stick to the affordable M-Pesa charges. There is a challenge in winning the popularity of the populace since M-Pesa has been quite aggressively established. Redirecting the share would require another great and practical technological invention. The family bank takes time to notify their customers that money has been credited to their accounts, whereas such notifications are instant for M-Pesa, considering that it is a mobile banking service offered by a telecommunications company. It is also difficult for customers to make withdrawals from their bank accounts using the M-Pesa channel, while the opposite is true. Family Bank branches and ATMs are not as plentiful as M-Pesa agencies, thus incurring travel inconveniency for their clientele to the nearest Family Bank Branch to transact their businesses.


Family Bank boasts of the fact that they are in charge of saving money, thus ensuring security. On the other hand, M-Pesa still relies on banks to save their money at the end of the day for security purposes. This is because M-Pesa points do not pride themselves on a secure banking hall but rely on agents to collect money in the morning at the Bank and deposit it in the evening. Hence, this makes Family Bank indispensable.


M-Pesa has other additional functionalities, such as paying bills, loading airtime, and purchasing goods. With these options on M-Pesa, you do not have to move an inch to clear your bills or transact other businesses since banking is just at your fingertips as long as you have a phone. This poses stiff competition for Family bank because you have to travel to a bank to conduct such business. M-Pesa already attracts a higher number of clients compared to Family Bank, and redirecting them is a pretty challenge since other banks are looking at targeting the same population. M-Pesa does not impose banking charges on its customers for saving money or any ledger fee. There are also fewer terms and conditions required to follow for an M- Pesa customer compared to those of Family Bank.

Solutions to the Problems Encountered

Family Bank could improve its standards and be a match for M-Pesa if they consider diversifying its services. i.e., incorporating features that have not yet been exploited by M-Pesa or that are impossible for M- Pesa to achieve. This could include offering a number of insurance covers to their clientele, maximizing their investment opportunities, venturing into the e-market, and offering sponsorship to the citizens to increase their popularity and attract a substantial niche in the populace. This would help them forge a step ahead of M-Pesa's possibilities and potential. Family Bank should also concentrate on providing corporate social responsibility to build its reputation and earn some recognition. Family Bank could also increase their interest rates on deposits made while reducing or resembling the transactional charges with those of M-Pesa, thus making it affordable.

Another factor that Family bank could consider is increasing their number of branches and ATMs to counter that of M-Pesa so that it can be easily accessible and reduce the burden of queuing and time wastage. The family bank could also amalgamate some of its services with that of other mobile networks to enhance mobile banking. This could be like enabling their clients to pay, e.g., electricity and water bills through their established mobile banking services. They could also give bonuses as a form of enticement on these services, no matter how small, just to encourage clients to continue using their mobile banking services. Promotion of this has the potential of huge benefits for both the organizations and the client. However, most organizations are deeply searching for alternative measures to mitigate the challenges forcing them to link up with M-Pesa.


The most suitable option for Family bank to adopt successfully that can assure them an increased number of customers is by merging some of its services with M-Pesa or with other telecommunications companies. Another relevant option is to expand their branches countrywide. This is a guarantee that they will increase their clientele. This option poses no risk and no losses to them. Venturing into e-marketing is another way of growing Family Bank. This would provide them with a global market to serve.


Family Bank should realize that customer satisfaction is the main goal in any business enterprise. They should therefore seek to please them and reward them so as to maintain them and ensure stable customer loyalty. It should also seek to establish good relations with them so as to earn a fine reputation. Looking into customers' desires is also a prime factor so that you can fulfill their needs. i.e., identifying and meeting the gap. This will also help them improve their services and have new ideas. All in all, appreciating competition is the essence of business.


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The Triumph of the Mobile Banking System M-Pesa Over Its Competitors in Kenya. (2023, Mar 09). Retrieved May 20, 2024 , from

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