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Technology drives inclusion in Kenya

Technology drives inclusion in Kenya


​​​​​​​​​Interview with PostBank Kenya Managing Director ​Anne Karanja about Scale2Save project

>> See the story in latest News & Views

>> See related video

>> Learn more about Postbank's Scale2Save project​

Tell us about PostBank Kenya.

PostBank Kenya serves people spread throughout the nation. With some 658 agents as of March 2019 – and the number will grow – along with our 98 branches, we complement branch and agents with a robust mobile banking platform.

PostBank Kenya has a long history. We started operations in 1910. We became a legal entity in 1978 through the Kenyan legal framework. We operate through an act of parliament. The reason they created KPOSB was to use it as a vehicle that would mobilise savings for national development while inculcating a savings culture and encouraging thrift. That is our core mandate, but we also do other financial intermediation, such as international money transfer services, agency banking for other banks. But our core mandate is to mobilise savings.

​Who are your core customers?

Our customers are ordinary Kenyans at the so-called “bottom of the pyramid”,ordinary citizens who hold US$100 up to US$1,000 in savings. That said, we cater to all income segments and age groups. Why? Because being a government-bank that was created to inculcate a savings culture among Kenyans. We want to impart with people an attitude, idea, or habit by persistent instruction. We do not want to leave anybody out.


 A video snapshot of the Scale2Save project in Kenya. 

WSBI goes to a village saving group to learn about Postbank Kenya's “Bank in a Bag” project, M-Chama digital offer and agent banking. Interviews savings group member, a Postbank expert and Managing Director Anne Karanja.

>> See more videos at Scale2Save YouTube channel

How much of a culture of savings exists in Kenya?

It is there but we need to do more. Kenya is a consumer society. The level of savings to GDP is a bit low, around 8 per cent. In other countries the savings level reaches more than 50 per cent. Therefore, we have a big job to do to nudge Kenyans to save. That’s were programmes like Scale2Save, a partnership between WSBI and Mastercard Foundation, can help us.​ 

Our Scale2Save project tries to establish the viability of small-scale savings through village savings groups, harnessing our agent banking network, our M-Chama platform and “Bank-in-a-Bag”. I will share more about this in a bit.

​What are the barriers to savings in Kenya?

Disposable income is a big barrier, because you can’t save what you do not have. Distance is another, which is being addressed in Kenya though alternative delivery channels, agent and mobile banking. The other barrier is perception: that savings only occurs when people have a lot of money – i.e. “only the rich can save”. This is something we are trying to address.

As I said earlier, in Kenya we have a consumption-driven society. The majority of Kenyans find they have nothing to save, because they consume a lot, and some - times seek consu​​mer loans.

​Tell us about ‘Bank in a bag’. 

We developed Bank in a Bag, part of our Scale2Save project work, after we realised that Kenyans are looking for more convenience. We need to go where they are, so we created a “kit” inside a backpack that uses technology tools, more specifically a laptop and router, to be used by our staff on the ground to open an account anywhere. That means opening accounts in home​s, at colleges, at the market. In a sense, Bag in a Bag is a mobile branch.

​Why don’t people go to branches?

Our core customers are very busy people, working in markets, trying to eke out a living. We found that they could not leave their businesses to go to a branch. They buy and sell their wares, are travel all over the country, and look for convenience.​

​For example, staff go to the marketplace, schools, colleges, even bus stops. As we open accounts for customers, the same staff are also telling customers about the benefits of savings – our mandate at PostBank Kenya. By doing this, we help address the need for Kenyans to understand why they should save, why it helps them navigate better through life, and how to create financial freedom. We then open accounts for them.

Tell us about PostBank’s work with savings groups. What innovation do your employ to reach them?

Savings groups are one of our target customers. In Kenya, group savings is very popular. Savings groups here consist of around 15 to 30 people who come together to save. What we realise when we work with groups is that sometimes their objectives are not very clear as to why they are saving. The majority save for consumption. They save money throughout the year and receive their share pay out at year’s end.

​With our ultimate goal in mind – instil in people a savings mindset – we go in to teach them how to create objectives for savings. We have a delivery channel that we purposely created for groups, a mobile banking platform called M-Chama. It is designed especially for groups.

Savings group members open accounts

and conduct business transactions. Through M-Chama accounts, groups can deposit deposits and distribute them to group members. Through the system, members are able to see what their savings group officials are doing. That makes groups more transparent, accountable and convenient. Individuals can receive money and place it into the group bank account using the linkage with the mobile banking platform. They use the platform when they are meeting. The group uses it when they give loans to their members through the savings pool the group has amassed. Individuals within the group also tap into the platform.

How has this helped savings groups? What was it like before?

​Before the current mobile platform, we would just opened accounts for the savings groups. The groups would gather, collect money and assign the treasurer to keep the funds at his/her home. Issues arose, however, because money could be stolen if there is a housebreak. Savings group officials sometimes exploited this, unfortunately, which caused many of the savings group to disintegrate. Through M-Chama, transparency lets members know what money is going in and out of their individual accounts and transactions by the group. Members see transactions done on behalf of the group by the officials of the group, such as the treasurer, chairperson and secretary. Members are fully confident with the group thanks to the M-Chama mobile banking platform.

​Who do you work with to make savings groups work?

We work with and sign a memoranda of understanding with NGOs in the business of bringing groups together. That said, sometimes groups form without NGO help. We also seek support at political level. Women politicians are particularly keen to see savings groups develop in local areas to combat poverty. We tap into political forces at county level and at government administrative level to set up groups.To do this, the first step is to talk about the importance of savings with people, emphasising it does not matter how much one saves. We share a message that through consistent savings, people will be able to pay school fees, medical bills and when they are done with basic needs, they can invest the remainder. When that happens, people create a new world for themselves.Once they are convinced to form a savings group, we call another meeting. All members in that group assemble, to hear from someone from our field team. This process requires PostBank Kenya to recruit and train sales ambassadors so that when we link with the groups, ambassadors continue the relationship with the groups, which means at times adding members, being the front-facing representative of the bank. We find it a cost effective way to keep groups in touch with us through face-to-face activity.

In a nutshell, we plug groups into the mobile banking system, give group officials credentials along with registering group members. Members can then monitor what officials are doing. They are able to deposit money through a PIN number and withdraw money through USSD code, which requires us to train them so that they know their way around the two transactions.

​What is the main challenge dealing with savings groups?

Distance is the first main challenge dealing with the groups. Groups are scattered all over the country. Kenya is 7 percent bigger in land area than France with 25 per cent less population. So it can become very expensive if we have to employ staff to monitor and follow up with the groups. That is where the sales ambassadors can be quite handy because they are the ones who reach out to these groups.

The agency network helps too, addressing the distance challenge, especially as they cover areas where PostBank Kenya has no branch presence. When customers need more money than can be provided through the mobile platform, the agents are used. Now their role is that they complement our 80 branches. Agents are shops, supermarkets, other businesses, so banking is a small part of what they do. They can receive deposits, give withdrawals, execute bill payments and give account balance information.

​Why is it critical to handle low-income people in Kenya? Why is it important for PostBank Kenya?

One main reason is that we want to be impactful in improving people’s financial status. 

Scale2Save; Financial inclusion; Innovation Hub; Innovation; financial resilience