By Frank Mutulu

Since M-Pesa’s arrival in Kenya, the banking industry has adopted mobile banking as one of the products it offers customers, but it wasn’t always so.

M-Pesa’s and Safaricom’s pioneering spirit in Kenya’s mobile money transfer business was not always accepted. Initially the innovation was challenged as stakeholders in the banking sector felt threatened.

Kenya mobile money transfer subscribers now number about 21.1 million, according to a report by the Communications Commission of Kenya. Deposits grew to $2.7 billion earlier this year, up from $2.4 billion in the previous quarter for the portable phone-based money wire service.

Safaricom, the Kenyan telecommunications giant, introduced the M-Pesa mobile money service in 2007.

“M-Pesa, revolutionized the money transfer scenes, allowing regular Kenyans, through a basic cell phone, access to money deposits and withdrawals,” said Brian Mung’ei, a business developer and digital strategist, speaking to AFK Insider. “It also allowed them the convenience of sending money…through multiple M-Pesa access points countrywide.”

ATMs were first introduced into Kenyan banking by Standard Chartered Bank in 1989.

While they were considered convenient and lauded by clients for trimming bank queues, early Kenyan ATMs were located in urban areas adjacent to banks. As such, they were not readily available to people living in rural Kenya. Those who maintained bank accounts and lived in the countryside had to travel long distances simply to make transactions at the nearest urban centers.

Kenya’s information and communications technology has grown rapidly and helped Kenya earn the name Silicon Savannah, according to an article published on Bloomberg.com.

“Technology is…meant to make life easier,” Mung’ei said. “This functional approach to technology has steadily warmed its way into the financial sector, and gradually been incorporated into banking operations.”

Early challenges to M-Pesa – mainly from banks – couldn’t keep the technology down.

“There was an attempt by banking industry players to stop the process,” said Habil Olaka, chairman of the Kenya Bankers’ Association. Former Minister of Finance John Michuki demanded a probe into the cash transfer platform, Olaka said. “Yet innovation works well without boundaries, and to its credit, the regulator (Central Bank of Kenya) deliberately or otherwise, did not interfere,” Olaka said.

Titus Muhoro, a credit and loans expert, said M-Pesa has become the small businessman’s financial avenue of choice.

In 2012 the telecommunications giant launched M-Shwari micro financing as an extension of M-Pesa to address the entrepreneurial needs of M-Pesa clients.

“The expansion of M-Pesa to the M-Shwari micro-financing package has further leveled the financial and business playing fields, allowing business owners and individuals to earn interest and take out loans based on their M-Pesa account histories,” Muhoro said.

A partnership of Safaricom and Commercial Bank of Africa, M-Shwari’s micro-finance package has further continued M-Pesa’s history of money transactions.

At the 15th Annual Africa Business Conference, held this year at the Harvard Business School campus in Boston, African panelist Miles Sampa, as published on Times.co.zm, said, “Africa is growing, Africa is modernizing. It is no longer the hopeless continent … portrayed in the early 80s. It is a continent in progress, in constant evolution, with an ongoing commitment to offering its people better living conditions.”

Kenyan banks continue to affirm the new narrative of Africa as the next frontier.

“The leadership of Kenya in the banking innovation scene has played a great role in the agency banking model,” Olaka said during Mindspeak, a monthly industry and market conversation provided by Kenyan Financial Analyst Aly-Khan Satchu.

Mobile money, particularly M-Pesa, has allowed Kenyans in the diaspora, particularly the U.K., to send money directly to relatives in rural Kenya. So popular is the transfer service that GizmoPay, an American financial services IT company, announced it is looking for a Kenyan partner to build an M-Pesa-style app for the diaspora.

However, Roomthinker, a Kenyan blogger and entrepreneur referred to only as M, reckons that while “there is plenty of money-building IT solutions for the enterprise … it is very difficult to monetize mass market solutions, especially in a mass market that is used to free stuff.”

M is the co-founder of Ushahidi and Mzalendo, Kenyan apps that received worldwide acclaim for ingenuity in ICT innovation. He also gives a regular series of micro-blog tips on business, dubbed “Biashara” – Swahili for business.

“People want solutions to problems, not just the technology,” M said, noting that the tech innovations that succeeded in Kenya identified a problem first, before continuing to develop and package a solution. “Software is not the end. It’s the start. You must (then) package it. Market it. Sell it. Train. Support. Improve. Refine. Grow,” said M.