KCB Group Plc has received regulatory approval to acquire a majority stake in Riverbank Solutions Limited, marking another notable move in Kenya’s growing mergers and acquisitions activity.
Through this transaction, KCB, a titan in corporate and retail banking, will acquire a 75% stake in Riverbank, a specialised provider of financial technology platforms and hardware components, issued share capital. The agreement is valued at about Sh1.93 billion ($15 million).
Once finalized, the move is set to deepen the bank’s service delivery, particularly to micro, small, and medium enterprises (MSMEs), and to scale its financial technology offerings by integrating Riverbank’s innovative solutions.
In accordance to the authority’s analysis, the merger is within two distinct but interconnected markets. Upstream is the provision of fintech solutions, a vibrant and competitive space where firms like Riverbank develop and supply the technological backbone for financial institutions.
Riverbank, founded by former Football Kenya Federation (FKF) president Nick Mwendwa, creates software for digital payments, agent banking solutions, terminal management systems, and revenue collection platforms, which it provides to commercial banks, governments, and enterprises.
However, despite Kenya boasting Africa’s third-largest fintech ecosystem, behind Nigeria’s 217 and South Africa’s 140, with 102 companies, Riverbank only commands an estimated market share of 0.04%, competing in an estimated Sh451.33 billion ($3.5 billion) market driven by innovation and interoperability.
While Riverbank’s share in the broader fintech market is small, its role in agency banking is significant, forming the downstream part of the merger analysis. Downstream, on the other hand, lies the market for agency banking, a model pioneered in Kenya over a decade ago, which has become indispensable for financial inclusion, facilitating transactions worth an estimated Sh1.83 trillion in 2024.
Most banks, including KCB, rely heavily on third-party providers like Riverbank for these technologies, with 74% of commercial banks using a combined approach of outsourcing and partnerships for fintech development. In fact, only 8% develop solutions entirely in-house.
Therefore, the merger is viewed as vertical integration: KCB will operate downstream as a service provider, while Riverbank supplies the critical upstream technology. Given Riverbank’s small share in the broader fintech market and the presence of numerous competitors, the transaction is not expected to negatively affect competition.
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