Customers of the new product known as "Orange Money" can request bank loans, make interbank money transfers, withdraw or send cash and pay bills all from their mobiles.
"You now have your bank in your pocket," Equity's Chief Executive James Mwangi said at the launch of the new service. "That is how easy banking is going to become."
Some $30 million changes hands [in Kenya] through mobile transfers daily, Central Bank of Kenya Governor Njuguna Ndung'u said during the launch of Orange Money.
Telkom Kenya, which retails as Orange, and which is controlled by France Telecom's Orange, lags market leader Safaricom, which operates the popular M-PESA transfer service, as well as another operated by the local subsidiary of India's Bharti Airtel.
"The service is mapped onto the customers' bank accounts, making it possible for the customers to literally run their accounts from their mobile handsets, with the accounts' security aligned to that of the bank," a statement from the two companies said.
Money transfer services, especially M-PESA, are hugely popular in Kenya and have transformed the way money moves around. Many Kenyans who did not hold bank accounts can now access basic banking services from their handsets.
Kenya now has 12 million mobile banking account holders, up from 2.6 million at the end of 2007. Deposits stood at a total 1.2 trillion shillings at the end of September from 540 billion in 2007, the governor said.
Equity Bank had 5.7 million customers at the end of September, the most in Kenya, largely driven by its mobile banking product with Safaricom that is known as M-kesho.