"Your credit history is the most important criterion a financial institution will consider when providing a loan," he said, adding, "Transparent engagement between borrowers and banks is vital, encouraging customers to communicate early when facing repayment challenges."
The Kenya Shilling Overnight Interbank Average (KESONIA) model represents a major shift toward risk-based loan pricing to promote fairness and financial inclusion.
It enables banks to evaluate risk more accurately, creating opportunities for MSMEs, youth, and women-led enterprises to access affordable financing.
Under the model, Mr Adeniji said lending rates are pegged to the average overnight interbank rate-the rate at which banks lend to one another -with an additional margin based on each borrower's credit risk.
"This approach encourages responsible borrowing and repayment discipline, aligning loan pricing more closely with individual risk profiles rather than blanket interest rate caps or uniform pricing," he said.
Lack of collateral
PostBank Managing Director Raphael Lekolool observed that there is a notable shift towards financing the small enterprise sector, being a major player in driving Kenya's economy.
"SMEs control almost half of Kenya's GDP, so it is an area we cannot ignore," Lekolool said.
Even as the appetite for credit in the sector grows, Lekolool said that the short shelf life of MSMEs makes them less attractive to financiers.
"Most SMEs are not well organised, raising suspicions among banks due to a lack of records," he said.
Ms Mulili pinpointed the lack of market intelligence as the primary bottleneck for small and medium-sized enterprises.
"Products rot in Kenyan markets while identical goods are imported from outside Africa," she noted.
According to her, the solution lies in platforms like AfriExim's Africa Trade Gateway (ATG), where verified SMEs can instantly view real-time demand, product, quantity, and buyer across the continent.
She said UBA's 20-country footprint and active trade desks further expose Kenyan exporters to vetted opportunities.
Prohibitive cross-border payment has been identified as an issue holding back cross-border trade.
"Funds move across borders in local currencies and dollars, and back, eroding margins," Mulili said.
UBA counters this via the Pan-African payment and settlement system (PAPSS) and internal B2B platforms, enabling local-currency billing and receipt with losses below 1 per cent.
"It might look minimal, but again, if you accumulate it for an SME, on a larger scale of it would be a big quarter," Mulili said.
Customer protection
The CEO's further argued that commercial banks across the country must leverage the digital lending space to protect customers.
Bhartesh Shah, Chief Executive Officer of SBM Bank Kenya, said mushrooming digital lenders have taken advantage of the vulnerability of those seeking convenience by burdening them with expensive loan facilities.
Shah said that due to the current cost of living, many Micro, Small and Medium Enterprises (MSMEs) that require short-term working capital have opted for mobile loans, which seem efficient but are costly.
Ralph Opara, Country Managing Director at Access Bank Kenya, said that unlike traditional banks, mobile banking eliminated the barriers to accessing finance for the unbanked.
"What mobile banking and digital banking did is to ensure that you eliminate distance and cost to the customer where they can transact or access a financial service through their mobile phones," Mr Opara said, noting that distance was a barrier for people seeking financial services.
He said mobile banking provides convenience, allowing lenders to reach customers on mobile phones and to tailor credit facilities.
In creating impactful products, Mr Opara challenged banks to embed financial literacy in their products.
"We live in a very dynamic environment where consumer changes and requirements change rapidly. So as you even design products, you have to keep monitoring it and tweaking it to ensure that they stay relevant to their end users," Opara said.
With the increased uptake of mobile banking and digital banking, he said there is a need for consistent revenue, cash streams and collateral. Best smartphone
"Digital banking looks at alternate data-driven credit models to come up with a lending product and by using these alternate credit models like mobile money transactions, utility payments and supplier invoices, basically create a credit worthiness profile for the user," he said, reiterating that digital and mobile banking is reshaping credit scoring models.
SME governance reforms
National Bank of Kenya Managing Director George Odhiambo, in his sentiments, raised concerns over weak governance, poor data systems and outdated perceptions about lending.
He noted that these remain the biggest obstacles preventing Kenyan SMEs from accessing affordable credit, even as banks modernise their assessment models.
Mr Odhiambo said many SMEs struggle to move from founder-led operations to structured enterprises with proper boards and independent oversight.
"Many of them go to stability after 10 or 20 years. So when you tell them you need to change your governance, have a board, have independent directors, they find it uncomfortable to go to the next level. That is the meaning of awareness," he said.
He noted that bank assessment models have shifted significantly over the past two decades. In the early 2000s, location defined creditworthiness, an approach he says is now obsolete.
"You could be stationed in Nakuru but deliver to someone in Naivasha or Limuru. The market space is no longer a barrier to assessment," he said, explaining that online commerce has made many SMEs nationwide players regardless of where they operate.
While SMEs often complain that banks still demand collateral, Odhiambo insisted the real challenge is data quality, not assets.
"Lending is about trust. If you miss accommodating mobile payments in your assessment, you miss who the SMEs actually are," said Odhiambo
He urged entrepreneurs to consolidate their business activity, including mobile receipts, into a primary account to build a reliable financial history.