M-Pesa - Mobile Banking in Kenya

M-Pesa is an innovative mobile-phone-based money transfer service from Safaricom, the largest mobile network operator in Kenya. M-Pesa allows users with a national ID card or passport to deposit, withdraw and transfer money to other users easily via SMS. Originating from the idea of using mobile technology to help customers make payments to microfinance institutions, M-Pesa had transformed itself into a nationwide money transfer service used by millions of people in Kenya, with total transfers amounting to three times the national GDP of the country. Given its early and rapid success in Kenya, the company is now considering expanding to other neighboring countries, including Tanzania and South Africa. Unfortunately, success is not easily replicable. The case describes the main elements of the M-Pesa system in Kenya, placing special emphasis on its design and implementation. It allows students to reflect on how business model innovation must be clearly aligned with operations and technology. It also allows for discussion on which marketing and operational aspects - i.e., branding, pricing schemes, channel management and distributors' policies - are key for the successful implementation of a business model in an emerging economy in which most of the population is at the "bottom of the pyramid." Based on an understanding of the M-Pesa model, discussion can be expanded to analyze whether the different elements of the business model can be replicated in other countries considering the different cultural, socio-demographic and competitive landscapes.