The problem with armchair clairvoyants such as myself is that when a random prediction becomes true, we nestle deeper into our armchairs and smugly grin at the world around us. On July 26th 2010, I wrote the following in my Monday column:

“We can now pay our utility bills using a mobile phone and can get instant mobile phone pre-paid credit in the form of Okoa Jahazi, which can easily be translated into a formal loan product using our top up history as evidence of “past payments”. Call me a raving loony, but by 2020, it may be domestic institutions and perhaps a mobile company that make our top ten financial institutions!”

This raving loony just got vindicated. On November 27th 2012, Safaricom and Commercial Bank of Africa jointly launched the M-shwari product. Essentially the product allows an M-Pesa customer to move funds into a virtual bank to earn interest or to borrow funds as and when needed. With savings interest rates ranging from 2% to 5% p.a. on whatever balances are in the account [including one shilling!], I finally figured out that instead of keeping funds lying idle in my M-Pesa account as I tend to do I could move them into my M-Shwari account and make my money work for me. As a trained banker the first rule of thumb I was taught is never to let your free cash flow sit uselessly in a current account (unless of course your creditors are after your neck and/or various other body parts). The fact of the matter is that those who are ordinarily cash flow positive M-Pesa users have graduated from using it simply for money transfer to having it as an electronic wallet with “float” in the very real case that you have that one payment that needs to be made suddenly to a person who is not physically near you. [If you are over fifty and have difficulty understanding the concept of mobile money transfers please stop reading from this point on.]

But this is the interesting phenomenon. The product was launched a little less than two months ago and to date has 1.2 million members and growing. Let me put these numbers into perspective. Using Central Bank of Kenya’s most recent data from the 2011 Annual Banking Supervision Report, Kenya had 14,250,503 formal bank account holders as at December 2011. 78% of these account holders sit in four banks namely Equity Bank at approximately 6.5 million, Co-Operative Bank at 1.8 million, KCB at 1.6 million and Barclays Bank at 1 million. Four banks with about 500 brick and mortar branches between them control over three quarters of the banking population in the entire country!

Turning back to M-Shwari: what is driving the rapid uptake? Access to financial services without the hassle of filling innumerable and exasperating forms, explaining [and defending] your entire life besides that of your progeny and ancestors as well the convenience of doing it from wherever you are situate be it your office, your house or your favorite watering hole if you are spiritually inclined. The fact that you will be set up as an M-Shwari customer faster than the time it takes to negotiate your way through the security doors and un-occupied Customer Service Representative’s seat at your preferred bank branch plays a big role in the early adopter mentality that Kenyans have displayed for this product.

M-Shwari, in the space of less than two months, currently has 240,000 loan accounts in a country that by December 2011 had 1,450,642 personal loan accounts in the entire banking sector. The average loan amount is the princely sum of Kshs 1,087/- with a thirty-day repayment period where a borrower is charged a flat facility fee of 7.5%. Now before you keel over into snorts of derision, picture this: the loan applicants are not necessarily your typical microfinance borrowers looking to finance their business. It is Kerubo sitting at home who gets unexpected visitors, has run out of gas to cook a meal for them and has insufficient cash in her handbag to buy the much needed replacement cylinder. It is Juma who is at the supermarket buying a few items and realizes that he left his wallet at home.

Your M-Shwari borrower is you and I, the average person who needs a temporary loan for an unexpected emergency. With no manual intervention and a completely faceless back end processing mechanism, one can gain instant credit access [assuming one’s “credit history” on record is acceptable] in less than five minutes which is why they are currently processing no less than 6,000 applications a day and have an 88% repayment rate within the first thirty days.

What does this portend for our financial institutions? I’ll probably be hung, drawn and quartered if I say what my crystal ball shows me so I won’t. But the early adoptive capacity of the Kenyan mobile subscriber should inform any industry: financial or otherwise. The fact that your product or service offering requires reams of paper to access, tens of people to process and a harassed, disembodied voice at the end of the telephone line to inquire from may very well be an image of Tyrannosaurus Rex in the next ten years. Your customer wants convenience when accessing, dignity when being turned down and most importantly, rapid results when being processed. You can take that to the bank – pun fully intended.

This product should be an indicator of the direction Kenyan consumers want to go in the future and may actually push the financial services sector be it mainstream banking, insurance or stock brokerage kicking and screaming down the path to a painless and virtual service delivery. It is not Kerubo – the reluctant hostess- who will drive this revolution, it is the makers and users of the cash that drives the wheels of Kenya’s economy who will force this change. It’s time to put back the cloth over my crystal ball, sink deeply into my armchair and watch.

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Twitter: @carolmusyoka