IBM's Social Innovation is Supporting 'Smarter Banking' in Kenya

IBM is helping Kenyan sugar cane cutters through its social innovation support of a mobile banking system. It enables these workers to earn more money. Normally, a sugar cane farm would have to shut down for two or three days a month to enable its cane cutters to travel to a bank branch and wait in a long queue to deposit their pay. Now, with the introduction of mobile banking, the cane cutters can keep working and monitor their pay deposit on their phones. The mobile banking also allows them to access cash from local agents, buy at local shops and transfer money to others.

IBM has collaborated with Family Bank, a Kenyan bank, to implement an Oracle FLEXCUBE core banking system which runs on IBM hardware and the IBM AIX operating system. This social innovation mobile channel will be key to Kenya's banking industry and to its neighbouring countries. Anthony Mwai, country general manager for IBM in East Africa, explains that it was only five years ago that banking transactions in Kenya were manual. People had to plan an entire afternoon for a trip to a bank branch to do their everyday banking. Branches closed down entirely for two or three days for end-of-month accounting. Plus, now as banks use mobile connectivity to expand their reach into a population that didn't have access to banking before, the banks know they have to upgrade their IT.

Banks realise it is too expensive to build branches to reach customers across rural areas. Now they don't have to as the banks are catching up with a social innovation African mobile finance service run by a mobile phone company called M-PESA. It has taken the banking sector by surprise since it launched in 2007. It provides banking transactions without the need to visit a bank branch by using mobile phones. It is run by IBM Global Services for Vodaphone.

The fact that people are registered for M-PESA shows there is potential. African banks are using this social innovation mobile technology far more than the banking sectors in the west like the U.S. In Kenya, bank customers can even pay for their bread and milk delivery through their mobile phones. It has completely transformed Kenya's economy.

This is a huge turnaround if you add up all the banks in Kenya that have been operating in the country for more than a century. This new social innovation in banking now allows farmers in rural areas to check prices at different markets and decide where to take their products. After selling their crops they can take payment in their mobile wallet and then use the money to buy supplies in town before heading home—making life far more easier and comfortable.

Photo Credit: IBM's Main website