Mobile money’s quick growth transforming financial services

By Titus Mbithi

Mobile banking apps have greatly transformed how Kenyans access loans, and consumers no longer need to fill out lengthy forms, pledge collateral or undergo vetting by a mean- looking credit officer.

Take the example of Branch, a Facebook-linked mobile application that allows users to borrow and repay micro-loans via mobile money platform M-Pesa. In March, it received $9.2 million in equity funding to help grow its loan book.

Users need to download Branch from Google Play, log-in with their Facebook accounts and can begin applying for small loans at a one-off fee of between six per cent and 12 per cent depending on loan and repayment period.

The Android app awards users a credit score by remotely analysing information such as calling patterns, mobile money transactions and Facebook behaviour, the California-based techie revealed.

KCB M-Pesa disbursed a total of Sh7.8 billion in loans in its first full year of operation to March.

Safaricom and KCB Group said the app has about 5.2 million customers and lends out an average Sh660 million in loans every month.

Equity Bank – through its Equitel mobile virtual network operator licence – so far has 1.7 million customers and issued loans worth Sh8.5 billion in the year to December 2015.

Co-operative Bank in August 2014 unveiled M-Co-op Cash, an Android app which offers loans of between Sh100 and Sh200,000 repayable within a month at a one-off seven per cent processing fee.

Transactions on the M-Coop Cash platform nearly doubled to 12.4 million up from 7.5 million with 183,000 loans worth Sh1.6 billion disbursed through the phone in the full year ended December 2015.

M-Shwari, launched in November 2012, saw its active subscriber base stand at 3.9 million as at March 2016; and had issued mobile loans via M-Pesa worth Sh7.4 billion.

M-Shwari’s volume of non-performing loans (NPLs) is at 1.93 per cent, debunking the perception that mobile-based micro-lending is risky. The loans are payable within 30 days and attract a 7.5 per cent fee.

Mobile money lending firm Mkopo Rahisi has rebranded as a financial services provider and changed its name to Tala.

The app gathers more than 1,000 data points from customers’ mobile phones to make credit decisions and send loans directly to phones in record 20 seconds, founders of Tala say.