M-PESA: a case for the unbanked and underbanked in Africa

Safaricom's M-Pesa has been a well known success story throughout Sub-Saharan Africa, which is an innovative money transfer feature offered by the Kenya's largest mobile network provider. This is an exemplary case, as it is a story about an innovative financial product providing essential financial services to customer segments in the country with litter or no access to banking services through the mobile phone network. Since the service launch in 2007, M-Pesa has improved financial inclusion as it facilitates seamless individual and business transactions through the SMS based mobile payments. The service allows users to transfer money to other users (and non-users), and it enables money transfer between the service and a bank account. From 2011, international money transfer through the service became possible thanks to the strategic partnership between Safaricom and Western Union. As of March 2019, M-Pesa has more than 22.6 million customers in Kenya (over 45% of total population) and it started providing savings and micro-lending products. Will such a new non-bank financial services provider be a game-changer that would make banks' traditional business model obsolete?