A new plan by Kenyan banks to launch a money transfer service before the end of this year, through a joint Real Time Interbank Switch, will occasion increased competition for mobile money operators such as Safaricom's M-PESA, experts said on Wednesday.

They highlighted that money transfer fees in Kenya could be pushed down because of this.

The Kenya Bankers Association (KBA) has said that the switch will be up and running by November this year. It will enable interoperability across the KBA's member network.

"The Switch will enable interoperability across KBA member banks for retail payment streams and offers a game plan on how to regain the market lost to mobile money and other money transfer operators," said Grace Njoroge, assistant manager for digital financial services at Microsave.

Kevin Amateshe, digital channels manager at Nation Bank, said most banks in Kenya were facing challenges from "customers transferring money to their mobile money accounts instead of keeping it in their bank accounts, mainly because of the services mobile money accounts offer beyond just P2P transfers".

Graham Wright, group managing director at MicroSave, a digital and technical support company for financial institutions in Africa and Asia, said fees for transfers between banks in Kenya are currently high.

Other experts said the switch will help Kenyan banks claw back into an industry that is slowly shifting to digital platforms.

Wright cited data, availed by the Kenyan central bank, which showed that at least 2.5 million money transfer tractions were being processed daily. Of this, banks accounted for only 3.2%.

"Kenyan banks have witnessed a worrying trend where their customers rely on mobile money for payments and transfers leaving them grappling with inactive accounts and low activity levels in their banking halls.

"The inter-bank mechanism will be accessible not only to bank account holders but also to those without accounts who will get a code for making payments or withdrawing cash," said Njoroge.