M-FANISI: A FIRST BY MAISHA MICROFINANCE BANK

By partnering with Airtel Kenya, nationwide microfinance bank launches an innovative product that is driven by technology in order to reach more customers cost-effectively and conveniently

By George Gichuki

In today’s fast paced world of business, embracing technology has become inevitable.  This is because technology enhances efficiency, contributes a lot to the reduction of costs and in the process, it shores up profits. By and large in Kenya, technology has greatly assisted in deepening the financial sector. Scores of commercial and microfinance banks as well as microfinance institutions (MFIs) have invested heavily in technology in a bid to offer their products and services to customers effectively and efficiently, as opposed to relying on the traditional brick and mortar delivery channel. In this vein, they have leveraged on the mobile phone technology in developing products that have enabled them to serve their customers conveniently and cost effectively.
It is against that background that Maisha microfinance bank (which is licensed by the Central Bank of Kenya as a nationwide microfinance bank) recently launched M-Fanisi. Its technology partner in this initiative is Airtel Kenya. “M-Fanisi is a virtual bank that is available to all Airtel Money customers countrywide,” says Mr. Ireneus Gichana, the chief executive officer (CEO) of Maisha microfinance bank.

Unique
Letter M in the product stands for Maisha (the microfinance bank’s name). On the other hand, Fanisi stands for prosperity.  To start with, the product serves as an ordinary savings account, albeit the fact that it is delivered using the mobile phone technology.  It also performs as a transactional account.  To that end, the product has replicated some features of current accounts.  Furthermore, M-Fanisi has attributes of a fixed deposit account, packaged on a mobile phone. “A customer can deposit in the fixed account a minimum of Kshs. 500 all the way up to Kshs. 1 million,” says Mr. Gichana. “ This attracts an impressive interest rate on an incremental basis –   8.5% for one month, 8.75% for two months, 9% for three months and 11.25% for 12 months ( the maximum period of time),” he adds.
Another  unique proposition is that through M-Fanisi, customers can access  credit for seven days at 3%,  while  fourteen days credit  is offered at 5% and finally, for thirty days ( the maximum period of time),  the rate of interest is 7.5%.

Rationale
The decision by Maisha microfinance bank to launch M- Fanisi was informed by the fact that the move would benefit both the organization and its customers.  “From the organization point of view, it is more cost effective to drive products using technology as opposed to opening branches,” says Mr. Gichana. “ For instance, in order to reach all corners of our country, we would need to open about three hundred branches and spend millions of shillings in the process, but now we are able to do so through M-Fanisi,” he emphasizes. This is in line with the goal of microfinance, which is to efficiently reach the unbanked population through innovative and cost-effective products and services.
Establishing physical branches (brick and mortar) is associated with huge costs like: putting in place a core banking system, hiring staff, putting up security measures and hiring cash –in –transit services.  Times have nevertheless changed and customers today need to be served efficiently and conveniently owing to their busy schedules.  Technology comes in handy to that end.   “Since launching M-Fanisi, we have been able to serve our customers on a 24/7 basis without requiring them to come physically to our branch,” avers Mr. Gichana.  In the same breath, the loans offered through this innovative product are competitively priced to the customers’ benefit.  For instance, the interest rate of a seven days loan is only 3%.

Quick uptake
In a period of only three and a half months, the product has attracted over 73,000 customers and 75 % of them have taken loans. Accessing a loan through this product is a matter of only a few minutes and parametres have been put in place to appraise the customer’s credit history before his or her account is credited. Those applying for loans are also required to have an M-Fanisi savings account.  So far, the lender has created awareness about this product through social media platforms, as well as below and above the line advertising.
To access the product,  a customer  needs  to have a line with Airtel, then register for Airtel money,  before  dialing  *222#  to go to the  Airtel money menu and finally  selecting  M-Fanisi.  The first time the customer signs up, he or she will be required to read and understand the terms and conditions applicable, before the account is automatically opened.  Once that process is complete, the customer can access all the products offered through M-Fanisi.   “During the short period of time that the   product has been in the market we have had to talk to customers to get their experience and iron out a few challenges,” says Mr. Gichana.
Innovation and efficiency are critical core values of Maisha microfinance bank. These two have been addressed by rolling out M-Fanisi.  “We are using innovative technology to drive services to our customers in an efficient manner and this will reduce our cost and help us to remain relevant in the market,” he emphasizes.  “In that respect, we are keen on listening to our customers in order to develop products that are relevant to their needs and we are therefore optimistic of redefining how the banking business is conducted in the country,” he adds.

Market trends
The first of January 2018 will see the introduction of the International Financial Reporting Standard – 9 (IFRS-9) among commercial and microfinance banks. Consequently, one percent of a performing loan will be provided for in a lender’s books of accounts as non-performing, as soon as the same has been advanced.  “As an organization, we are gradually taking critical steps in order to comply with this requirement and we are waiting for further directions from the Central Bank of Kenya (CBK), “says Mr. Gichana. IFRS -9 is a departure from the traditional way of making provisions for a loan only when the borrower has defaulted on its payment.
Unlike commercial banks, microfinance banks focus more on serving the bottom of the pyramid customers as their mandate is to enhance financial inclusion.  Besides savings and loan products, microfinance banks also have current accounts and foreign exchange operations.  Playing in that space by embracing technology, Maisha Microfinance bank is confident of conquering more market share and fulfilling its goal of enhancing financial inclusion.