The bank's chief executive
"The smartphones acquired will be used as guarantee, for those who fail to honour the contract we will simply disable their handsets," said
The lender acquired a Mobile Virtual Network Operator (MVNO) licence from the communications regulator to give it more control of its mobile banking strategy.
Besides potentially raising uptake of its mobile banking service, Equity's move is set to provide a new revenue stream from the loans advanced on handsets.
"We will charge a two per cent interest rate (per month) on the phone loans, we cannot charge an interest higher than what we charge for our other banking products," said
Compared to basic handsets that retail from as low as Sh1,500, smartphones with the capability of handling data-hungry services sell from about Sh7,000, indicating a likely lucrative lending opportunity for Equity, whose total loan book stands at about Sh200 billion.
Customers will choose their favourite mobile handsets under the scheme, similar to a laptop loans deal dubbed "Laptop ni Lazima" that targeted students.
Equity's subsidiary for mobile services, Finserve, is among three firms that the
The MVNO licence enables an entity to offer services such as customer registration, SIM card issuance, billing and customer care to end users without holding a spectrum licence.
Other than Finserve, other providers that were licensed include
This means that most mobile subscribers have basic phones which are not capable of accessing faster internet services such as 3G, leaving a huge unutilised investment by the mobile firms.
According to latest statistics from the industry regulator, the number internet subscriptions rose to 13.1 million from 11.6 million.
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