[kictanet] Kenya IGF Online Discussions. Day 3. Developments in Fintech and E-commerce

Thu Jul 12 12:36:05 EAT 2018

Good afternoon,

It actually is happening in Kenya. The longer you stay without a loan the lower your score becomes.

Also in the western world, people that do not need a loan still take them to keep up their credit scores.

Call it the cost of living in a data analytics driven world or is it wrong assumptions built into the algorithms?

Regards,

Alex Watila

From: kictanet <kictanet-bounces+awatila=yahoo.co.uk at lists.kictanet.or.ke> On Behalf Of Grace Bomu via kictanet
Sent: Thursday, July 12, 2018 10:19
To: awatila at yahoo.co.uk
Cc: Grace Bomu <nmutungu at gmail.com>
Subject: Re: [kictanet] Kenya IGF Online Discussions. Day 3. Developments in Fintech and E-commerce

@ Indeje, I wonder whether we are being driven to a "you must have a credit score" world and thereby a situation where one might have to take a loan just to get a credit score.  

2018-07-12 10:12 GMT+03:00 David Indeje via kictanet <kictanet at lists.kictanet.or.ke <mailto:kictanet at lists.kictanet.or.ke> >:

As regards 3. How about the Credit Reference Bureaus? Are they stuck in a time warp or is the legislation in place encumbering them from innovation?  

I once spoke to KBA's Dr. Habil Olaka and he noted that the CRB's role in the market has not been achieved as it is currently constituted. 

According to him, CRB was not to play the role of blacklisting persons who have defaulted but rather to inculcate an environment where people become responsible and

similarly,

help financial institutions to better price a person who is seeking financial help. 

This is a reason that led to the launch of the Loan Calculator by the KBA. There reasoning was it is better to get a loan from a bank rather than the mobile lending platforms.

 However, in line with what @GraceBomu notes on mobile lending, FSD in their 2017 report <http://fsdkenya.org/annual-report/2017-annual-report/>  recommended that "As the market for digital loans grows and diversifies, further research is needed to help build a more complete and timely picture of how and whether these products can improve Kenyans’ lives."  

On Regulation: CBK has the best answer on how it regulates mobile lending institutions so that they are differentiated from the banks. However, I agree with BBK MD Jeremy Awori who says "Excessive control and regulation does not help the market. This is adding a lot of bureaucracy and cost, which will find its way to the charges of products" he spoke this yesterday.  

Same sentiments have been raised by Safaricom and also the CBK <https://www.businessdailyafrica.com/markets/marketnews/Proposed-finance-law-will-cripple-CBK--says-governor/3815534-4585524-dt5vtiz/index.html>  as regards to the new Financial bill 

Kind Regards,

David Indeje 

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On Thu, 12 Jul 2018 at 09:47, Grace Bomu via kictanet <kictanet at lists.kictanet.or.ke <mailto:kictanet at lists.kictanet.or.ke> > wrote:

Hi Ali,

With regard to the question of mobile money lending, it is a subset of micro finance in many ways. It definitely leads to more financial inclusion for the unbanked and provides credit to those who would normally not be targeted by banks. However, the interest rates are sometimes so high that one wonders if the goal is financial inclusion or bondage through credit. There needs to be more transparency by the lending apps not only about their rates but how these are derived, what data they hold and for how long. The money lending apps are also marketed in isolation from other important information that one needs in order to make the most out of credit. In comparison to microfinance for example, the institutions take time to educate borrowers about finance, business plans, loan repayment plans etc. There are also social structures like women groups or SACCO groups that assist borrowers to reach their goals with the money they borrowed. This is a gap with mobile money lending apps which are more impersonal and agnostic about the purposes for borrowing. 

Regards,

Il giovedì 12 luglio 2018, Ali Hussein via kictanet <kictanet at lists.kictanet.or.ke <mailto:kictanet at lists.kictanet.or.ke> > ha scritto:

Dear listers.

Since the advent of Mpesa, Kenya has been recognized as Ground Zero for Mobile Money/Payments Innovation the world over. According to a World Bank report one in every ten human beings regularly using mobile money is a a Kenyan. 

Over the last few years Fintech (Financial Technology) has become all the rage. American startups are setting up in Kenya. The more common ones that we know are Branch and Tala who combined have raised over $150m of venture funds in the last few years. These two are mainly mobile lending platforms. Insuretech is taking root. Payment Platforms are proliferating. Banks are jumping onto the Fintech Bandwagon with mainstream banks like Barclays and HF Group launching their mobile lending apps. Equity Bank boldly announced a few weeks ago that they are building an API Bank. Banking as a Service as it were.

Not to be left out, Blockchain and it’s offspring, Bitcoin is threading to complete the upheavals in the financial sector. On top of it all the government is playing catch up on regulation with the announcement of the Finance Bill 2018. See analysis from KPMG on this.

https://home.kpmg.com/ke/en/home/insights/2018/06/finance-bill-2018-analysis.html

To ponder:-

1. Are we moving too fast? Is there a need to take a chill pill and reflect on the gains and achievements of the sector?  Should we regulate lightly or heavily? 

2. Should we regulate and cap the mobile lending platforms? Are they playing a crucial role of financial inclusion or are they just loan sharks on steroids? 

3. How about the Credit Reference Bureaus? Are they stuck in a time warp or is the legislation in place encumbering them from innovation? 

4.  Lastly is the BlockChain conversation being overhyped? And how do you separate the technology from the cryptocurrencies it spawns? 

Over to you Listers. 

Ali Hussein

Principal

AHK & Associates

+254 0713 601113 

Twitter: @AliHKassim

Skype: abu-jomo

LinkedIn: http://ke.linkedin.com/in/alihkassim

"We are what we repeatedly do. Excellence, therefore, is not an act but a habit."  ~ Aristotle

Sent from my iPad

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KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.

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