Kenya: Digital Financial Products Re-Define Service Delivery

Oct 05, 2017 | Daily Nation; All Africa

Collaboration between microfinance banks and telcos in rolling out products and services that boost financing of micro small and medium Enterprises (MSMEs) is imminent, financial sector players say.

Microfinanciers are being considered to have an important role to play in financing MSMEs that will power Kenya's take off and improve the quality of lives through creation of goods and employment. There are about 13 microfinance banks, which are licensed by the Central Bank of Kenya (CBK). Considering the trends of mobile phone penetration in Kenya, the market is expecting more exciting products to hit the market soon. Mobile money explosion boosted by cheaper connectivity and conducive regulatory environment will spur more innovation in the sector and enhance financial inclusivity. The Kenya Bankers Association (KBA) says the financial industry has an outstanding record of identifying and introducing new innovations that have improved efficiency, lowered cost, made life easier for customers and opened new opportunities for growth. "Businesses especially MSMEs continue to decry lack of credit to fuel their growth engines. And where credit is available, it may not be affordable to the MSMEs," said KBA chief executive Habil Olaka, last week during the launch of M-Fanisi, a savings and loan product by Maisha Microfinance Bank (MFB) in partnership with Airtel. Maisha MFB became the first telco-backed microfinance to launch a savings and mobile money solution in the market and the fourth financial institution, alongside banks such as Commercial Bank of Africa (CBA), Kenya Commercial Bank (KCB) and Equity. "Digital financial services have re-defined service delivery within the sector, offering even greater access to mainstream banking services, especially to the under banked. We are pleased with Maisha Microfinance Bank's aggressive innovation strategy which leverages Africa's most utilised technology, the mobile handset, to provide a platform that not only extends financial services but also enhances a savings culture within our population," said Mr Olaka. DIVERSIFY TRADITIONAL MODELS According to the bankers' lobby, the need for financial institutions to reach out and diversify from the traditional models of operation towards technology driven service provision is now imminent. A gradual shift in consumer attitude and growing demand for any-time anywhere access to services has characterised the banking sector in the recent past. Data from the Central Bank of Kenya shows that MFBs sunk into a collective Sh377 million loss in the year ended December 2016 from a Sh549 million pre-tax profit in 2015. MFBs, which are shielded from the interest rate capping law have been struggling to secure funds for investments. Read more on All Africa. Source: All Africa