The financial sector in Kenya has really grown thanks to innovative products such as M-pesa. Banks use the mobile based service by Safaricom to offer loans and savings to their clients. According to a report by Moody’s Investors Service, the digital financial services have brought positive impact to the banking industry.
“Banks have piggbacked on a successful model, partnering with M-pesa to offer services like loans and deposits, and improving their cost efficiency,” said Christos Theofilou, a senior analyst at Moody’s. Mr. Theofilou added, “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.”
Fintech innovations by local banks and the interest rate cap have hindered international companies from entering the digital financial market in Kenya. These innovations have enabled large banks to move most of their services from banking halls to the digital space. As more smart solutions are introduced into the banking industry, the largest and most innovative lenders will gain more business.
According to the report by Moody’s, Safaricom is expected to retain its dominant position in the mobile payments sector. The mobile services provider maintains the most comprehensive customer data needed for digital lending services. It further notes that M-Pesa is likely to take business from banks if it continues to expand its financial services business.