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KCB has stepped up its claim for a bigger share of the diaspora remittances market by signing a partnership with Western Union, which will see money remitted from abroad deposited directly into customers’ accounts.
Central Bank of Kenya (CBK) reports show that in January, KCB was ranked third behind Equity Bank and Co-operative Bankin terms of remittances handled.
Equity and Co-operative Bank each handled Sh1.1 billion or 12.3 per cent of the Sh8.9 billion remittances in January, with KCB handling Sh1 billion or 11.2 per cent and Western Union Sh558 million.
“We expect that this service will increase the volumes of remittances carried through KCB,” chief business officer James Agin said yesterday during launch of the partnership.
The CBK data shows that total remittances from abroad stood at Sh8.76 billion ($102.97 million) for the month of February.
(Read: Equity, Co-op win race for control of diaspora cash)
North America accounted for 48 per cent of these funds, while remittances from Europe stood at Sh2.48 billion or 28 per cent, while those from the rest of the world were Sh2.1 billion or 24 per cent.
Customers signed to the new service will direct the funds to their KCB accounts through online banking, call centres or KCB branches. The remittances handled translate into increased revenue for the banks in the form of fees that recipients of the cash pay banks for the transfers.
KCB said it had rolled out the new service to all its 230 branches in the East Africa region, and would soon extend it to Burundi. The bank has been offering Western Union money transfer services in its branches since 2005.
In the next three months, Mr Agin said, the bank would have rolled out the second phase of the service, which would involve integration with the bank’s ATM system and mobile banking platform.
Western Union regional vice president for southern and East Africa Richard Malcolm said the account-based money transfer service would soon be widespread in Africa, at a time when the battle for control of the diaspora remittances market has intensified.
He added that he expects more financial institutions to follow suit and introduce similar services.
“This type of service is convenient and accessible to our customers, and is evolving, and you will soon see it spread across Africa, Kenya included,” said Mr Malcolm.
The service is, however, limited to inbound remittances, which KCB said is its main focus given there were more inbound transfers from the diaspora than outbound remittances.
Mr Malcolm said, however, that Western Union would work with KCB in the technical details to enable outbound transfers, although he could not give a timeline when the system would be in place.