Kenya: Banks Take to Infrastructure Sharing
By NewsfromAfrica
NAIROBI--- Banks in Kenya are slowly turning to sharing of infrastructure as an avenue of choice to cutting operating costs and increasing revenue from non-competitive payment infrastructures like ATMs and Point of Sale terminals.
According to an independent financial services provider Paynet Group- which processes withdrawals and bill payments transactions on ATMs for over 32 banks and financial institutions in Kenya, the number of competing ATMs in the Kenya banking industry that are now interconnected each has grown to nearly 600 ATM’s in the last six months.
The interconnectedness is being made possible by a new PesaPoint ATM interconnect system that is converting banks’ ATMs into universal cash machines usable by any cardholders and at low PesaPoint fees.
“Already 6 banks are interconnected through the new PesaPoint interconnection system which is converting ATMs belonging to banks into PesaPoint cash machines ensuring other banks card holders can transact on these ATMs at low fees,” says Bernard Matthewman, CEO of Paynet Group .
ATMs belonging to KCB, CFC Stanbic, and Diamond Trust Bank are among early adopters interconnected for the service through the independent financial network system making it possible for card holders to use these ATMs to access their money at their usual PesaPoint fee.
“We see this infrastructure sharing initiative as a key component for the deepening of the financial sector,” added Mr. Matthewman.
Paynet Group owns PesaPoint Limited and operates one of East Africa’s busiest payment switch- currently processing payments for VISA, Mastercard, China’s Union Pay, American Express, Safaricom’s Mpesa, Airtel Money and for 32 member financial institutions in Kenya.
Kenya Commercial Bank (KCB) and Diamond Trust Bank confirmed that the service was already live on its ATM network. “We have the PesaPoint network linking our ATMs to about 32 other financial institutions at very affordable costs,” confirmed Dr. Martin Odour-Otieno , KCB Group Chief Executive.
Dr. Odour-Otieno says the bank has benefited with more customers from other banks using its ATMs and thereby contributing to higher revenue from the machines in fees. KCB customers can also access their money through other banks ATMs at low costs thanks to same PesaPoint Interconnection system.
As the drive for banks to join their European and American counterparts in infrastructure sharing continued, KCB became the largest bank in Kenya to date to have its ATM network converted into a chain of universal cash machines via the PesaPoint local network interconnection. Previously, a cardholder connecting to another bank from a KCB ATM had to part with between Ksh 150 and Ksh 200, as this connection relied on an international network but will now only pay a third of that for the same transaction.
According to Richard Coate, PesaPoint Managing Director, PesaPoint interconnect system is a new tier of business for PesaPoint Limited , well known for its independent ATMs spread out in strategic locations in cities and towns across the country, helping card holders access their money from wherever they are. PesaPoint also now provides its services from retail outlets across the country where member cardholders can access standard PesaPoint services via Point of Sale machines.
Mr.Coate says the inter-bank connection system hopes to link all ATMs in the local banking industry enabling “any ATM serve any customer, regardless which bank’s name is branded on it”.
“Sharing of infrastructure will ensure banks maximize both revenue and return on investment in banking equipment like ATMs and Point of Sale terminals for banks. Ultimately this makes the industry more efficient which will drive down transaction costs,” he said.