Microfinance institution, Faulu Bank, intends to restrategize its operations by leveraging on digital banking after receiving KSh 900 million from its parent company, Old Mutual.
- The bank has onboarded many of its services online with the goal of making them accessible to a wider range of customers who are ditching physical outlets in pursuit of convenience.
- Faulu Bank has also sought to broaden its distribution channels to improve its customer base, with a higher focus on capital injection for MSMEs which have been rapidly growing in Kenya.
- The microfinance bank has an impressive customer base of about 350,000 accounts, but with expansion stagnating, it has seen declining profitability, prompting a change in banking strategy.
“Over the last 18 months, we have made significant investments in enhancing our digital capabilities. We are eager to become a leader in the digital finance space. Many of the services that the bank offers are now available online, and our intention is to make our services more accessible for our customers,” said Faulu Bank CEO, Julius Ouma.
The digital banking race has intensified this year, with banks refocusing their operations online to compete with Fintechs and lending apps, which have been highly adopted by small business owners.
To slither into this new market, banks have been forced to adjust their loaning volumes as well as repayment cycles which expose them to new arenas of risk.
“This refocus is also in line with our purpose of being our customers’ most trusted financial partner and helping them achieve their financial goals. It is also critical to the bank’s ongoing competitiveness in an ever-expanding financial services sector in Kenya,” said George Maina, Faulu Bank chairman.
The microfinance institution, which was established 30 years ago, also intends to partner with various companies that would streamline their digital banking capabilities, as well as improve their operations.
A Central Bank of Kenya report reveals that Microfinance banks have experienced total losses of more than KSh 1 billion in 2022. Digitization and flexibility with changing demands is set to be their redemption.
“With this change, we are both enhancing the Faulu service offering to our existing and future customer network, as well as positioning the business to deliver more value sustainably. Faulu has the full backing of Old Mutual in these endeavours, and we are confident that the refocus will drive shared value for all our stakeholders,” said Arthur Oginga, CEO Old Mutual Holdings.
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