Have a look on The rise of Kenya’s new shylock economy

It took banks years to catch up with M-Pesa when they finally launched PesaLink last year. It is said that they may have allowed telcos firm Safaricom too much time to be entrenched as the market leader to challenge it. Before the price of loans was capped in September 2016, banks had warned that the law would push borrowers into the thorny embrace of loan sharks.

Two years later, and with the Banking Amendment Act, 2016 still firmly in place, commercial banks are morphing into loan sharks. Banks, which are regulated by Central Bank are getting into unregulated activities which experts describe as shadow banking system.

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The formal banking sector radical shift to the lower tier market is slowly taking shape. With interest caps limiting what banks can earn from the debt market, banks are now eyeing a share in the lucrative instant loan market up till now dominated by loan sharks. Although the banks strongly deny taking this route, industry critics see their latest product line in direct competition with thThe popularity of Shylock dens in Nairobi is usually fueled by lengthy and tiring procedures in obtaining a loan from mainstream financial institutions.

But, thanks to the advent of mobile banking,  formal banks have also lunged into shylocking eyeing the good returns in this niche market. They have since unveiled a number products targeting this growing market segment. For commercial banks, there is M-Shwari, sponsored by Kenya Commercial Bank, KCB M-Pesa in partnership with Safaricom and M-Co-op Cash managed by Cooperative Bank and Timiza by Barclays Bank- all targeting this lucrative informal market. There are currently 49 digital credit providers with mobile apps Branch and Tala giving commercial banks a run for their money in this space. But Equity has always been on the forefront in pushing for its own breakthroughs – seeing itself as more of a financial service provider than a stiffly regulated bank.

Image result for The rise of Kenya’s new ‘shylock’ economy Read more at: https://www.standardmedia.co.ke/business/article/2001300058/the-rise-of-kenya-s-new-shylock-economy

Pesalink seeks larger share of digital payments Equity Bank launched Equitel on its own – the only lender that sells sim cards for its mobile money venture. In July this year, Equity Bank plunged into the growing but murky waters of fintech by unveiling its own mobile lending app. “Finserve will be an independent commercial fintech that will provide technology solutions,” said Equity Group Chief Executive James Mwangi. “Having seen the revolutionary impact that fintech capabilities have brought to the bank, we have taken a deliberate strategy to make Finserve an independent commercial subsidiary that will focus on delivering solutions to propel the African economy,”

 

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