Kesho is a Swahili word which means tomorrow and from it , you get M-Kesho, a revolutionary product from Kenya's fastest growing mobile network, Safaricom and Kenya's fastest growing bank, Equity. Safaricom, Kenya's listed telecoms operator with 13 million subscribers has entered into partnership with Equity Bank to launch an innovative product that is likely  turn the other banks and operators green with envy. This innovation comes hot on the heels of a fierce battle between Safaricom on the one hand and the Comunications Commission of Kenya (CCK) and Safaricom’s rivals on the other. Not to mention that a number of banks have also been jittery over Safaricom’s M-Pesa which has largely revolutionised mobile money yransfer services in the country. But Safaricom’s rivals and the banks that have been exploiting their customers through exorbitant ledger fees and interest rates haven’t heard the last of Safaricom yet. It turns out that M-Pesa was just a tip of the iceberg as M-Kesho squarely sits on the turf of banking. M-Kesho, which has been under development for three years is a product that introduces true banking functionality to M-Pesa, which so far has just been a money transfer service.

An M-Pesa user can open an M-Kesho Equity Bank account with just Kshs100 (about US$1.25 ). All one needs is to be an M-Pesa subscriber, a Kenyan ID and two copies of one’s passport photograph. The user then fills in a registration form and Equity Bank vets the account in 48 hours. After successful vetting, the M-Pesa user receives a confirmatory SMS, updates their M-Pesa phone menu and can then perform M-Kesho transactions. M-Kesho is targeted at the unbanked population especially low income earners who are kept away by bank charges driven by a penchant for supernormal profits.

M-Kesho allows users to deposit as little as Ksh100 into their accounts and also withdraw money from their bank accounts using M-Pesa. In addition, M-Kesho users can also request for loans of between Kshs100 and Ksh 5000. (US$1.25 - $62.5) On vetting and approval of their loans, the users receive the loans via M-pesa. M-Kesho users earn interest on their accounts starting at 0.5 per cent to 3 per cent per annum. M-Kesho users can also access personal accident insurance facilities from Kshs 530 to 1,030(US$6.7 -US$12.9) per annum, depending on whether they pay annually, monthly or weekly. The insurance cover is upgradeable to full life insurance cover after one year.

Credit rating for users applying for loans is based on the users last 6 months M-Pesa history as M-Kesho facilities can be transacted straight from the phone without the users ever having to go to their bank or insurance agents.

"This is a Kenyan innovation, and many countries will visit the country to learn from this," said Safaricom CEO Michael Joseph.

M-Kesho also gives M-Pesa agents an extra avenue to make more revenue by registering as M-Kesho agents. It will also allow users to transact banking services 24 hours a day and transact banking services when away from banks and ATMS and may soon feature in locations such as bars, restaurant and malls, which currently host some M-Pesa agents.

"If all M-Pesa customers are banked as is envisaged with the new product, Kenya will be the most banked country in Africa and indeed the developing world," said James Mwangi, Equity Bank Chief Executive.

President Mwai Kibaki who presided over the launch termed  the product a good example of lowering barriers to entry for the poor in the financial markets and encouraging them to save and access credit.

Also present at the launch on May 18 was Prime Minister Raila Odinga and Finance Minister Uhuru Kenyatta.

The service has been received amidst much critical acclaim by the Kenyan tech community. David Mugo, a Kenyan blogger claims its a revolutionary service with M-Pesa handling more transactions than Western Union worldwide. Many also see M-Kesho as another revolutionary feature that will continue to widen the gap between Safaricom's innovative features and those of its competitors.

This is not the first time Safaricom is teaming up with Equity Bank. Following yet another landmark partnership in January 2010, Safaricom’s M-Pesa subscribers can now withdraw cash from Equity’s Automated Teller Machines (ATMs). The move will not only increase the withdrawal points but also deal with the challenge many of its agents at times face of lack of liquidity.

It will also allow non-Equity account holders to withdraw their money from the M-Pesa account at any of the bank’s branches including those in neighbouring countries such as Uganda and Southern Sudan.

Zain, Orange and Yu who are Safricom's competitors are yet to give any statements on the latest service. Also awaited eagerly is what other banks have to say  about the latest partnership between Safaricom and Equity Bank. While CCK has beaten a hasty retreat on the controversial regulations aimed at ‘fair competition’, the launch of M-Kesho will add to arguments that Safaricom's market dominance of more than 75 per cent (more than 13 million subscribers) of Kenya mobile phone users is as a result of its innovativeness rather than anticompetitive practices.

Already M-Pesa consumers have begun questioning on whether the service will be rolled to other banks and on whether merchant accounts can be linked to the service. Only time will tell.