Digital lenders book early wins from CBK licensing

The recently licensed digital lenders are reporting significant growth in loan uptake on their platforms as borrowers start sieving out entities not regulated by the Central Bank of Kenya (CBK).

A new report published by digital lender Tala on Monday notes that the CBK licensing has grown to be a major factor for consideration when customers are choosing digital lenders even as the cost of credit remains the primary driver of choice.

“Consumers are more concerned about ‘access’ rather than ‘licensing by lenders’. However, licensing by CBK is slowly gaining traction as a factor when consumers are choosing digital lenders,” noted the report.

The prominence of licensed digital lenders has been linked to the order brought by CBK licensing as borrowers perceive the approved credit providers as the better option.

“We are coming from a place where there were 300 plus digital lenders in an unregulated market with some rogue actors. Customers see that regulation came in to fix the industry and this is the perception they would have in choosing a digital lender with CBK’s stamp of approval,” Tala Director for Growth Annstella Mumbi said.

The CBK has licensed a mere 22 entities out of nearly 300 applicants who had applied for the regulatory nod by September 15.

The 22 are Jumo Kenya, Letshego, MFS Technologies, Natal Tech Company, Ngao Credit, Pezesha Africa, Tenekata Enterprises, Umoja Fanisi, Mobile Limited (Tala) and Zanifu. Others are Ceres Tech, Getcash Capital (Flash Credit Africa), Jijenge Credit, Kweli Smart Solutions, Mwanzo Credit, MyWagepay Limited, Rewot Ciro, Sevi Innovation and SokoHela.

The remainder of operational digital lenders continue to await the nod of the sector regulator with the rubberstamp now proving crucial to the attractiveness of entities to customers. The CBK is expected to gradually issue approvals to digital lenders with pending licence applications.

“The CBK is one of those trusted institutions, so when you get licensed by the Central Bank and the customer is made aware of that, there is a sense of trust in a business that is licensed,” said Mr Kevin Mutiso, the chairman of the Digital Lenders Association of Kenya.

With CBK licensing, players say the nod has been central to shaking off perceptions that had widely seen most if not all digital lenders characterised as rogue.

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