KCB M-Pesa floors competitors in Kenya’s fintech lending market

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KCB has become a darling of Kenyan mobile phone loan borrowers emerging the most preferred lender in the highly competitive fintech lending sector.

Beating the Uhuru Kenyatta family NCBA’s M-Shwari offering by over 50 per cent, KCB M-Pesa is among banks that have leveraged technology in their Customer Experience programmes.

The biggest bank by asset in Kenya scored significantly high on the Net Promoter Scores in a report released by Ajua, an Integrated Customer Experience Company.

Interest rates

KCB emerged top in the Banking sector in Q2 2019 with an NPS of 34.

Customers cited lower interest rates on loans compared to other banks as the reason they preferred the lender.

“Also, the KCB M-Pesa service led in the Mobile Money Lenders industry with an NPS of 41 owing to lower interest rates,” said the report.

According to the Kenya Demographic Household survey 2018, mobile loans are the third most important loans after SACCOS and Commercial Banks.

The report notes that customers in this industry were particularly keen on competitive interest rates, friendly payment periods as well as speed and efficiency in service delivery.

It also notes that the first experience determines whether a customer will promote a brand or not.

“Unlike other industries, customers care more about interest rates and speed than customer service,” adds the report.

This report is Ajua’s second quarterly Customer Loyalty Industry Benchmark for 2019.

The Benchmark covering 8 industry sectors included Mobile Money Lenders and Food and Beverage for the first time.

Ajua ranking for the fintechs and how customers rated them. [Photo/Ajua]

Fintech lenders regulation

For the larger part, mobile money lenders have remained a highly unregulated industry despite having grown greatly since the introduction of mobile money services through M-Pesa in 2007.

However, they have come together under the Digital Lenders Association of Kenya (DLAK) to promote industry best practices.

DLAK which was launched in June this year will also help drive a coordinated approach in addressing the emerging industry’s pressing issues.

Incorporated in 2019, DLAK brings together digital-first lenders and other key investors to represent and promote the common interests of stakeholders. These include digital lenders, consumers and the digital lending industry.

Members will work together to set ethical and professional standards in the industry. They will also work to collaborate with policymakers and other stakeholders in addressing cross-cutting issues.

DLAK also seeks to drive the overall growth of the fintech sector and is open to all ethical digital lenders subject to signing and demonstrating the commitment to the DLAK Code of Conduct.

The association will initially focus efforts on dealing with the regulatory challenges that presently require attention while promoting ethical business practice in the industry. It will also run consumer sensitization programmes.

In the mid-term, the association is targeting activities and initiatives to leverage the combined know-how of the industry in order to foster the quality, safety, and reliability of the services and products for digital lending customers.

All the current members have signed the Code of Conduct.

The Code represents an ongoing effort to continually evaluate how digital lending industry can best serve the customers, respect the efforts of regulators, and set useful precedents for how digital lenders contribute to the financial ecosystem.

Read: Kenya’s struggling insurance industry turns to technology for survival

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