How Safaricom is Transforming into a FinTech Company

What do you do when you are one of the most profitable firms in Africa, you have roughly 30M subscribers which is 70% of the entire country, but your results are anchored on a mobile money service year on year. The answer is Safaricom’s pivot into financial services leveraging their existing base and technology. It also might be why they seem unbothered by other telcos trying to encroach into their turf on services like data and call tariffs. They are not playing that game anymore.

All this is happening while competition shares a paltry market share and saw most growth at the height of a political boycott campaign on Safaricom’s services. Do not get me wrong, this is not an endorsement of Safaricom’s services, actually the competition has better products in some segments, however, it’s the subtle change of tact that many will appreciate is a stroke of genius by the market leader now facing a market dominance inquiry by the Communications Authority (CA).

M-Pesa has been a major growth driver and revenue stream for the telco. Almost a third (1/3) of their $2.3 billion revenue in their last financial year came from M-Pesa. They increased their merchant footprint and transactions by 63% while issuing 3 digital loans every second through their partnerships with CBA and KCB banks on M-Shwari and KCB-Mpesa digital loans services respectively. All these have reduced their reliance on voice and data though they are still major components of their portfolio.

Safaricom entered a partnership with PayPal that’s seeing a seamless transfer of money between the two players. This pits Safaricom against Equity Bank which had a one way PayPal to Equity withdraw service but one that required one to open a traditional bank account. That compared to the now ubiquitous M-Pesa wallet and the ease & convenience of transferring money both ways across M-Pesa and PayPal wallets leaves the Telco head over shoulders and shows Safaricom is serious about M-Pesa as a payment platform that it can leverage to become a global company not just a Kenyan success story.

It’s on the same platform that it’s building it’s Bonga social networking to augment M-Pesa and further it’s ambition of monetising digital interactions. This could turn Safaricom into a social network and see Kenyans enjoy sending money over chat even before Facebook and WhatsApp introduce the services on the African continent. “The integration of M-Pesa into a chat service underscores how technological innovation has become a central feature of the mobile money story.” Quartz

In the E-Commerce sector, Safaricom launched Masoko kicking up intense competition and providing a platform to small holder business operators. Vendors provide stock on the platform meaning that the Telco vets the vendors and provides a platform for them but does not own any stock. Needless to say the main payment option is M-Pesa and it’s not hard to see why.

More digital service include the music streaming service Songa/Beatz, a DigitalTV, M-Tiba, Digi Farm, M-Kopa the solar powered lighting kit and others through the Safaricom Foundation initiatives. All these Safaricom has done while the competition was seeking to increase subscribers through no fees, less charges and outright price wars. Maybe they have now learnt that consumers do not want not to pay for services, they want to pay for value. While consumers have benefited in one way or the other from the competition, Safaricom is the ultimate winner as the distraction was a perfect cover for the ongoing re-invention.