A newly published report shows that fintech disruption continues to broaden financial services in Kenya, a credit positive for the country’s banks.
Through collaborating with mobile payments services, particularly Safaricom’s M-Pesa, banks continue to offer higher value-added services. Fintech innovation is expected to continue to expand the market for banking services.
Kenyan banks are currently working with M-PESA to offer saving and loan products, which is a credit positive move for the sector and country, Moody’s Investors Service says in its latest report.
“Banks have piggybacked on a successful model, partnering with M-PESA to offer services, like loans and deposits, and improving their cost efficiency,” said Christos Theofilou, VP-Senior Analyst at Moody’s.
“M-PESA is a fintech disruptor and has dominated payments in Kenya since 2007. Mobile payments adoption has broadened financial inclusion and expanded the banking population, increasing banks’ customer base and revenue pool, and strengthening demand for banking products.”
Early innovation by domestic banks – and Kenya’s regulatory caps on lending rates – create barriers for global players aspiring to break into Kenya’s lending market. Large banks already offer most of their loans through mobile platforms, using advanced analytics to assess credit risk. As technology develops, the largest and most innovative banks stand to gain further, but must fight to retain a direct relationship with customers.
Safaricom is the main custodian of customer data used for mobile lending, with access to over 30 million subscribers. It is likely that Safaricom will continue to dominate the lucrative payments market through M-PESA, despite rising competition from banks and international players. M-PESA poses a potential threat to banks if it chooses to become a large distributor of financial services.(
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