M-PESA is proving a boon to millions of unbanked citizens in markets where it's been rolled out. The mobile money system has provided those with limited access to financial services a way to make safe, secure transactions.

But what it hasn't provided is access to other types of financial services that allow the unbanked to save and accumulate money. That's about to change.

CBA, Kenya's largest privately owned bank, has announced that it is joining with Safaricom Ltd., the wireless company behind M-PESA, to launch a mobile banking service that will let Kenyans save, earn interest and borrow money using only their mobile phones.

Called M-Shwari, the new product will make it possible for people to save as little as Ksh1 (a little more than $.01), and earn interest rates of up to five percent annually on their saved money. Additionally, customers will be able to borrow through M-Shwari, with credit lines starting at Ksh 100 ($1.16), and increasing as they save more money.

"It is simple. There are no ledger fees, no limits on the frequency of withdrawals, no minimum operating balance and no charges on deposits for M-PESA to M-Shwari account[s]," said Bob Collymore, Safaricom's CEO. "You do not need to go to a branch and fill in application forms. Just one click on your phone and you will have a bank account at no cost."

Collymore said M-Shwari is a groundbreaking financial service that will foster a culture of saving and allow Kenyans with no collateral to access micro-saving and loan products at competitive terms through the convenience of their mobile phones.

Safaricom has other partnerships with 25 commercial banks that will help it offer mobile banking solutions using its M-PESA payment ecosystem. That ecosystem includes a network of 47,000 agents who help users deposit money into the M-PESA system.

Safaricom reports that it has a subscriber base of more than 19.2 million customers, of which 15 million use M-PESA. The company said that more than Ksh 300 billion ($3.5 billion) is outside the formal banking system in Kenya, held by the 12 million Kenyans identified by the Central Bank of Kenya as unbanked.

For more stories like this, visit the mobile banking research center.

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