Fintech wave: Internet access spurs Kenya digital innovation

GM Tala Kenya Annstella Mumbi (left), Craft Silicon  CEO Kamal Budhabhatti and AFIK Secretary-General Munyi Nthigah. [Elvis Ogina, Standard]

In the heart of Kenya’s bustling financial sector, a quiet revolution has been unfolding, powered by the relentless rise of financial technology (fintech).

With just about 15 per cent of Africa transacting digitally, 85 per cent of the continent’s 1.4 billion people remain untouched, presenting a big opportunity for innovators to tap into the fintech space.

“Millions of people in Africa remain unbanked or under-banked, lacking access to essential financial services that are fundamental to fostering economic empowerment and sustainable development,” says Association of Fintechs in Kenya (Afik) Chairman Ali Kassim.

The impact of fintech on financial services and markets in Kenya is a testament to the transformative power of technology, extending far beyond the realm of algorithms and digital transactions.

Safaricom, for instance, commands the lion’s share of Kenya’s fintech market, with its innovations since 2007 creating a platform where people can manage their finances through the M-Pesa mobile money service. 

Kenya has experienced fast mobile penetration rates, with increased subscriptions followed by fintech innovations.

M-Pesa had over 30 million active customers as of March 2023, according to the telco’s financial report, which is more than half of Kenya’s population.

Over 600,000 traders received payment through Lipa na M-Pesa, the firm said.

Additionally, Equitel, a mobile virtual network operator, offers various banking services on mobile devices, contributing to financial inclusion.

“We are just starting to scratch the surface and despite the monopoly of mobile money players, the dominance of these players only serves 15 per cent of the total Africa population,” Mr Kassim said on Thursday during the official launch of the African Fintech Festival in Nairobi.

“We have witnessed a remarkable wave of innovation emerging from within the continent from mobile money payment to digital lending solutions.”

He said African fintech startups are pioneering groundbreaking initiatives that are shaping the financial landscape and empowering communities.

The festival, a collaboration between Afik and Africa Fintech Network, is scheduled for June this year and serves as a platform to amplify the voices of innovation, and foster collaboration and change within the financial technology ecosystem.

It was noted that while Africa is a continent of immense diversity and untapped opportunities, it is also a region that faces its fair share of challenges in the realm of financial inclusion.

Tala General Manager Annstella Mumbi said consumer needs such as financial security, access to credit and affordable or free transactions are still unresolved and this presents a big opportunity for investment in fintech.

In Kenya, investors in financial technology face a plethora of regulatory requirements.

In this regard, Afik hopes for a one-stop regulatory body for fintechs so that they do not have to deal with many authorities.

“We all must play in this ecosystem, we must adhere to the policy and regulatory frameworks when it comes to financial services,” Kassim said.

“You must have the licences to be able to play in this ecosystem”.

Kassim urged African leaders to remove unnecessary roadblocks for their growth.

“There has to be some policy interventions to ensure that more people get into the digital ecosystem without hurting the players who have likely earned their market share in the ecosystem.”