Concerns about the safety of Equity Bank's planned use of ultra-slim SIM cards in Kenya are unjustified, says Frost & Sullivan consultant Lawrence Lundy.

Equity Bank was granted a mobile virtual network operator (MVNO) licence in April, which it plans to use to boost mobile banking services in the country.

Subsequently, Equity also announced it would use 0.1mm ultra-slim SIM cards, which sit on top of an existing SIM card to allow users to access services from competing operators.

But Safaricom, which through its M-Pesa service dominates the Kenyan mobile money market, has complained to the Communications Authority of Kenya (CA) about the ultra-thin SIMs, saying they pose a security threat to subscribers.

Safaricom has even gone as far as to request the CA to block Equity from issuing these SIM cards.

For now, the regulator has told the bank it may only begin its MVNO operations with normal SIM cards, while consultation on the matter has been ongoing for the last month.

Yet Lundy has told ITWeb Africa the ultra-slim SIMs are safe and that Safaricom was unlikely to succeed with its complaint, which he believes is aimed at protecting the company's market leading position rather than subscribers.

"Equity Bank's low-cost solution enables their ultra-slim SIM cards to run over the top of customers' existing operator. By distributing the SIMs for free to its 8.7 million customers and with no switching costs, Equity Bank will be able to penetrate the market very quickly," he said.

"The market dynamics in Kenya are unique, as Safaricom, a mobile operator, is the market leader in mobile money with M-Pesa. The ultra-slim SIM is Equity Bank's strategy to capture market share in the lucrative mobile money market, where customers use a vast array of financial services such as loans, cross-border payments, and point-of-sale payments," he added.

He said internationally, Chinese MVNOs such as Alibaba's Ali Telecom were offering e-commerce and financial services through Taobao, Alipay and Aliyun.

Chinese banks Wujin Rural Commercial Bank and Quanzhou City Commercial Bank have also launched m-banking solutions using ultra-slim SIMs, and Singaporean operator M1 is offering a dual-SIM solution based on the technology.

Lundy said the competition injected into the financial services market by offerings such as M-Pesa had forced banking incumbents such as Equity Bank to innovate and respond.

"The rise of the smartphone has ushered in a wave of new competitors into the financial services market, from network operators in Kenya to Tencent and Alibaba in China. Equity Bank's fortunes should be watched closely by banks around the world," he said.