Kenya's mobile money banking service market will gain a competitor with today's launch of Equitel, a technology platform that ties Equity Bank with mobile phone service provider Airtel to provide the user with a thin SIM technology-based mobile banking and telecommunications service.

Equitel, introduced through Equity Bank's subsidiary FinServe Africa Limited, is designed to facilitate mobile access to financial services. It also represents a direct competitor to the likes of Safaricom's M-Pesa money transfer service.

The service works off thin SIM technology. This is a thin (0.1 mm) film that is placed directly on a subscriber's SIM card which then enables dual-SIM phone functionality.

Equity's thin SIM technology has experienced delays in getting to market because of legal wrangling and issues with regulators. Plans to roll-out the technology have also been met with resistance from mobile operator, Safaricom.

Safaricom issued a complaint to the Communications Authority (CA) arguing that risks such as PIN theft and denial of service could occur with the thin SIMs.

John Staley, chief officer for finance, innovation and technology at Equity Bank, has said, "We needed to look for a technology where we could give affordable secure mobile banking to our customers and the only way you can do that is by one controlling the channel yourself because USSD is a very cheap channel. If you can control the USSD channel then you don't have to charge your customers, they can do banking for free from a telecommunications point of view."

Equity Bank, one of the leading Kenyan banks with nearly 9 million accounts in the country, secured a MVNO (Mobile Virtual Network Operator) license in 2014.

Dr. James Mwangi, group managing director of Equity Group Holdings Limited, announced that the Equitel service has already garnered 1 million accounts and that the second phase is to rollout the thin SIM technology launched today.

Equitel will now roll out a new prefix number (0764) to accommodate new customers after the initial (0763) prefix expired.

Change in pricing

Finserve chairman Eng. John Waweru confirmed that the thin SIM will not be issued free of charge due to the expense of having it made. He said that the production of one thin SIM card cost the company Kshs 600 and this will be transferred to the customers.

Mwangi also announced that the service will include free mobile money transfer to any mobile money service and to any bank account in the country. "By offering money transfer free we are ultimately removing barriers to financial inclusion."

Following the financial year ended 31 March Safaricom's profits generated through M-Pesa stood at Kshs 32 billion, which might be eroded if more users branch out to Equitel.

Currently, consumers can deposit and withdraw money using M-Pesa from any bank in Kenya.

Mwangi also announced that all Airtel Kenya customers will have access to the Equitel banking service, bringing the potential number of Equitel customers to over 7 million.

Equitel customers will also be able to use any ATMs within East Africa to withdraw their money and ensure that the service is interoperable.

For developers, the Equitel network will avail its API for innovation immediately, effectively beating Safaricom's M-Pesa plan to roll out its API for developers in Kenya.

Mwangi said the aim is to have over 5 million accounts on Equitel by year-end.