Customer Calling

How SMEP’s Merchant Platform Doubled Its Transactions in 6 Months

It is our pleasure to introduce you to Mr. Joseph Sukumerr, Head of ICT, at SMEP Microfinance Bank, Kenya. We are discussing with Joseph the business environment in Kenya and how customers can benefit from offering services through the usage of cutting-edge technology. SMEP Microfinance Bank Limited is a public limited company regulated by The Central Bank of Kenya and offers banking services focused on Group Microfinance banking and SME & Church banking. SMEP has a subsidiary company, SMEP Insurance Agency, which provides insurance services to diverse customer insurance needs.

Hi Joseph, could you please share more about your company and business?

SMEP Microfinance Bank currently has 55 branches in Kenya and over 250 000 customers. In the next five years, we hope to grow our customer number to 1 million. We are currently moving in that direction. The company offers loans and savings products such as group retail loans, individual and consumer loans, SME loans, Agri-Business loans, deposit savings, etc.

How did you operate before implementing alternative delivery channels?

Before implementing alternative delivery channels, our clients had to move from town to town to access their money. So, let’s say we disbursed 1 million Kenyan Shillings to a customer. To withdraw that amount through their mobile phone was very complicated as the client had to do multiple transactions. So, they would need to travel by bus to the closest bigger city that has our branch in order to do that.  Now, with the agents, they can access their money within their own town. Deposits would initially be performed individually. For group customers, each member would deposit through M-PESA, and they would be charged separately by Safaricom. But now that we implemented the app and the agency solution, enabling the agents to collect their money, the money is collected in one transaction and can be deposited with the agent or Mpesa. After that the branches will receive their message and will push into individual member accounts in the core banking system.. There is no charge on the deposit cost and that is why our customers like it.

How did the solutions which you implemented improve your business?

Regarding the merchant platform, we started with about 1 mln worth of transactions in the first few months and then after three months they went to 5 mln. By December 2016 (in only after 6 months) we were doing about 15 million worth of transactions. This year in April we were already on 20 mln. transactions. So, in just few months, we doubled the number. When we increased the merchants, the transactions grew exponentially as well because more merchants mean more transactions. By the end of May this year we had more than 1500 merchants and our transactions worth was more than 30  mln.

On the mobile app we do around  3 mln. total deposits daily and about 2 mln. withdrawals. We have smaller types of transactions on mobile – balance inquiries, commissions attached to them, etc. With the initiative for customer onboarding, we aim to increase the number of active transactions on the mobile devices because when you register a new customer and they start transacting, the overall number of transactions increases.

Regarding the agency banking, we have about 90 active agents spread around the country. Most of these are activated in an area where we don’t have a bank but a branch which is a marketing unit and does not do cash transactions. Most of these branches are outside of Nairobi.

You are partnering with Software Group. Why did you choose the company to be your delivery channel solutions partner?

Our partnership with Software Group happened at the right moment. We met at the time we were just setting up the bank for microfinance banking. And our aim was to do channels. We first did an integration through M-PESA that allows customers to deposit funds via M-PESA agents. So, when we decided that we wanted to do withdrawals through mobile money, we implemented an agency solution. The deposits project went very well and it was successfully completed. So, we saw no reason as to why not to do the next one with Software Group which was also successful.  We did agency solution implementation successfully as well. That’s why we continued with the merchants’ platform with Software Group. So, every platform we deployed has been very stable and well supported and it has been a fantastic working relationship. We’ve had a great journey together with Software Group. The support of our system is very critical and we have a great support from your company.

What are the main benefits for your business and customers?

We are very customer focused. Every time we build a system or a platform we think about the cost on the customer and how we bring down the cost of each transaction. That is something that we managed to do together with Software Group. We’ve been able to rollout platforms that are saving costs to the customer.

Of course, the other main benefit is taking care of frauds. Fraud is common in this business – so we don’t allow cash to be handled by officers. When you allow people to carry cash to banks, you are exposing them to potential fraud. The other benefit is transparency. Initially we couldn’t track the transactions from the field because they were on paper until they reach the head office. Now we are able to do the tracking in a more reliable manner.  So, fraud is managed by visibility and transparency.

The third main benefit in terms of cost and efficiency is the delivery services. Now when we do disbursements and loans, we send sms messages to the customers that we are disbursing loans to them and they can make a withdrawal through a mobile or they can withdraw through the agents, so the time to deliver the money is reduced. Hence, customers are happier than before. In terms of the company costs, in the relationship we’ve had, we’ve managed to deliver this platform on affordable project costs.