Kenya’s largest privately owned bank CBA Group has upgraded its Loop mobile phone banking service to allow it to offer loans of up to 3 million shillings ($29,880), the highest mobile loan amount in the market, it said on Thursday.
Kenyan lenders have been turning to technology in response to competition from mobile phone-based services such as Safaricom’s M-Pesa. Banking and telecom executives say they are increasingly confident about mobile phone loans since they have suffered default rates of less than 10 percent.
Launched in March 2017, Loop did not offer loans before the new features were added, but CBA runs another app in partnership with M-Pesa, known as M-Shwari, which offers maximum loans of 20,000 shillings for 30 days.
Loop will allow users to access the 3 million shillings loan, repayable over three years, as well as overdraft facilities of up to 100,000 shillings.
Kenya pioneered the use of mobile money with M-Pesa in 2007, but the amount of loans disbursed by those platforms, including those operated by lenders Equity Group and KCB, has been kept relatively low.
Barclays Kenya launched its own app last March and capped its 30-day loans on the platform at 150,000 shillings.
Pressure on banks to use mobile channels to cut costs increased when the government capped lending rates in September 2016, crimping profit margins.