Over the last few weeks, there has been lots of media coverage concerning Safaricom’s wildly popular M-Pesa service. M-Pesa is a mobile money transfer service that enables Safaricom subscribers to send and receive money to anyone of the mobile network. M-Pesa has been operational for just under two years and in December 2008 it signed up its 5th million user for the service.

Notably, M-Pesa has Banks in Kenya rattled as a result since many subscribers are now using their M-Pesa accounts as virtual bank accounts. M-Pesa, apart from being initially launched to serve the rural unbanked is now under siege since Kenya’s banking industry wants the service regulated by the Central Bank of Kenya as it has characteristics that make it quite similar to the functioning of an actual Bank – an audit of the service has already begun by the Government. M-Pesa is also substantially cheaper than other Money Transfer services in Kenya which most Banks offer.

My main concern is that M-Pesa probably represents one of the most innovative mobile services and there is a very real risk that if it comes under regulation and controls, it could lose the appeal that has made it so popular. In terms of where the Kenyan Banking Industry stands on the M-Pesa agenda, I am reminded of the following Charles Darwin Quotation:

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”

Its time for the Banks in Kenya to change and innovate their offerings in the marketplace if  they are to stay relevant to their current and prospective customers. M-Pesa is simply pointing the way to the future.