Category Archives: Co-op

Caritas MFI Bank Launched

Thursday saw the official launch of the Caritas Microfinance (MFI) Bank in Nairobi. Caritas MFB,  which is owned by the Catholic Archdiocese of Nairobi, was licensed by the Central Bank of Kenya in June 2015. It has since mobilized almost Kshs 400 million in deposits and advanced Kshs 250 million of loans.

Caritas plans to go from having two branches, now serving 10,000 customers, to five by year-end and increase its authorized agent network from 16 to 50. Already 70% transactions are done using mobile banking and through a partnership with Cooperative Bank, Caritas customers can use Coop Bank ATM’s and visa cards for purchases and this will enable another potential 100,000 “unbanked and under-banked” members of 200 self-help groups in Nairobi and Kiambu counties to access formal banking services.

MFI’s were excluded from the interest cap law of 2016. Other deposit-taking microfinance bank institutions include Choice, Daraja, Ideal (formerly REMU), Maisha, SMEP, Sumac, U&I, and Uwezo. Larger ones include KWFT and Faulu  as well as the Chase Bank-owned Rafiki MFI that was quite large and growing fast. It is independent of Chase Bank but a lot of its future growth is dependent on the outcome of the Chase receivership.

Fintech Moment in East Africa: AmEx FT Pesalink Bitcoin

Recent events in the fintech (financial technology) payment space in East Africa.

Banks

  • The Kenya Bankers Association (KBA) unveiled Pesalink, a digital payments platform that is expected to cut the cost of transactions and transform the way consumers interact with their banks. Pesalink is a fully owned subsidiary of KBA and it will enable customers to make payments between banks in real-time, around the clock, without having to go through intermediaries. It has been approved at Standard Chartered, Co-Operative, Barclays, Commercial Bank of Africa, I&M, Diamond Trust, Gulf African, Guardian, Victoria, Credit, Prime and Middle East banks…“RT @alykhansatchu: .@HabilOlaka says @KenyaBankers will be targeting payments that exceed M-Pesa’s maximum transaction of ($675)”
  • Cooperative Bank: Is a demonstration that the how banks ar moving in the technology space. Kenya’s 3rd bank has adapted to their customers embrace and they enable more customers to use alternative channels for transactions.  They had a valentines’ week promotion to highlight and encourage customers to use alternative channels such as MCo-op Cash (get a loan straight from ones’ phone  at 1.16%  per month and send money to other MCo-op users for free) or at a Co-op Kwa Jirani agent (deposit cash into someone’s Co-op Account for FREE at a Co-op Kwa Jirani agent) or Co-Op cards.
  • KCB will unveil it’s fintech future – a strategy based on a digital finance  in Q2 of 2017
  • Another is EcoBank which launched a new mobile app which integrates Masterpass QR, a mobile payment solution from MasterCard.  It enables customers to send and receive money instantly across 32 other African countries.

Government

  • National Bank has launched cashlite payment solutions suite for county governments, Ministries, Government Agencies, and Departments. The bank has provided a variety of options for payments including mobile money, smart cards, and e-wallet and cash options, aligned with the continuing growth of mobile technology as well as consumers’ expectations for convenient mobile and online payments.
  • Strathmore University has supplied Busia county government with a revenue collection systems called CountyPro® with which the government hopes to grow revenue by 300%. It caters for all the unstructured county revenue sources including parking, market cess and trailer parking.
  • Mastercard is the technology partner for the Huduma Card in Kenya enabling payments for government services.  It is being issued by Commercial Bank of Africa, Diamond Trust, Equity, and Kenya Commercial banks. Kenyans will be able to pay for an array of enrolled Government services such as the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF) amongst others. 

Cards

  • mVisa will soon be in 10 countries as Visa expands its QR payment service for safe and easy mobile payments in emerging markets. It is already live in India, Kenya (started with Family Bank) and Rwanda, and will soon be available to merchants and consumers in Egypt, Ghana, Indonesia, Kazakhstan, Nigeria, Pakistan, and Vietnam.. (mVisa) allows consumers to use their mobile phones to make cashless purchases at merchant outlets, pay bills remotely and even send money to friends and family members by securely linking their Visa debit, credit or prepaid account to the mVisa application. Also any bank’s mVisa customer – regardless of where they bank – can transact on any mVisa merchant and merchants do not need to invest in POS infrastructure. Visa has partnered with Co-Operative, Family, KCB, and NIC banks.
  • Mastercard commitED to financially include 100,000 Kenyan micro merchants with Masterpass QR, a simple and secure digital payment solution. It will be introduced through various financial institutions. With it, consumers will be able to pay for in-store purchases by scanning the QR (Quick Response) code displayed at the checkout on their smartphones, or by entering a merchant identifier into their feature phones. Masterpass QR is currently being rolled out in Nigeria, Ghana, Rwanda, Uganda, and Tanzania.
  • Safaricom has issued 16,000 Lipa na M-Pesa cards in the pilot phase of a project that will launch later in the year. The Lipa na M-Pesa card uses pin and chip technology…It is also equipped with Near Field Communication (NFC) (which will) increases the speed at which customers make payments.
  • Verve: A dozen Kenya banks have partnered with Verve International, Africa’s leading low-cost payment network provider, in their push towards interconnectivity, cardless transact ability, and digital payments. Verve, best known as a card issuer has more than 32 million Verve cards and virtual/digital tokens issued across Africa and Verve is used in 19 African countries.
  • Pesapal adds American Express ​Pesapal integrated American Express into its payment platform on February 27, and  AmEx card holders can now use their cards to​ ​transact on any online payment portal that uses Pesapal. This is especially useful for hotels and other companies in the East African tourism space.  Pesapal which is in Kenya, Uganda, Tanzania, Zambia and Malawi and plans to expand to Nigeria in 2018 also offers an online booking engine for Hotels called ReservePort that’s used by Serena and Heritage brands.

Remittances

  • Facebook:  Facebook added international money transfers to its chat app. The service comes via London-based startup TransferWise in the form of a Facebook Messenger chatbot and enables transfers to and from the US, Britain, Canada, Australia, and Europe.
  • Bitpesa:  The company introduced an Africa to China corridor enabling users to send payments from Africa, directly to a Chinese bank account using bitcoin.
  • European choice: How much does it cost to send money from Germany to Kenya?@WehliyeMohamed posted that the global average cost for sending $200 in Q3 2016 was 7.42%, and that It cost him 6.7% to send money to Kenya. Then @MkenyaU answered that it costs 1.5% when he sends €200 from Germany and this reduces to 0.6% when he sends €500. He cautioned that some companies charge zero fees but their exchange rates are horrible as he shared a comparison of a dozen services available to send money from Germany to Kenya.

 

Mobile

  • Safaricom Mpesa: 10-year-old M-Pesa had 6 billion transactions in 2016 and is now in 10 countries – Albania, the Democratic Republic of Congo, Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania, and Tanzania. A new feature in M-Pesa will enable users to see the cost of transactions. In the initial phase, customers will be notified of the costs after, and in the second phase customers will receive a pop up message informing them of any charges prior to the transactions, while the third phase will see the service being made available to value-added M-PESA financial products including M-Shwari, KCB M-PESA, Okoa Stima and M-Tiba. The second and third phases of the update will be rolled out in coming months.
  • There have been some calls and reports recommending that M-Pesa be split from Safaricom. This could have happened years ago, but it is more difficult now that M-Pesa is an entrenched and central part of Safaricom today.
  • Tala raised over $30 million in Series B financing, led by IVP and joined by Ribbit Capital.   Tala uses smartphone data to build financial identity ..  mobile app for Android aggregates more than 10,000 different data points on a customer’s device, including financial transactions, savings, network diversity, and geographic patterns, and builds a customized credit score, or financial identity. Tala operates in East Africa and Southeast Asia with its main top markets being Kenya and the Philippines. Tala has delivered more than one million loans totaling over $50 million, and more than one million individuals have accessed the product in East Africa alone. See how Tala compares to other (fintech) / phone-lending apps in Kenya.  Forbes termed this the largest Series B raised by a woman founder in recent memory.
  •  Zeep is a smart and simple mobile platform that helps young people (teens) nurture good  financial habits. They ‘learn by doing’ within the framework of a secure financial environment with guidance from their parents.

Companies to watch

Irish Tech News released a list of 38 Kenya fintech companies to watch in 2017; these include Abacus, BitPesa, Branch, Cellulant, Chura, FarmDrive, Kopo Kopo, M-Changa, Pesapal, Tala and Umati.

Summit

The FT Africa Payments Innovation Summit will take place on 29 March 2017..it will bring together 250 business leaders from various mobile and financial interest groups and explore challenges and opportunities inherent in these developments: from providing greater financial access to un-banked people across the continent to providing new services and opportunities for an emerging middle class.

 

 

Bank Rankings Part 1: Kenya’s Top 10 Banks

2016 was an interesting, but also a challenging year, with a few key events happening that will alter the industry and future bank rankings going forward.

Who are the top banks at the end of 2016? We should start having their audited 2016 results published over the next eight weeks. But who will top the bank rankings for 2016, and why? (last year‘s bank ranking in brackets)

September 2016 numbers used

1 (1) KCB Kenya’s largest bank. growing at 5% year, going to embrace digital in a few weeks. KShs 480 billion in assets, 21.7 billion in pre-tax profit, with Kshs 372 billion of deposits and Kshs 332 billion of loans

2 (2) Equity Bank. Kshs 380 billion of assets and 19.5 billion profit. Deposits grew 15% in the year but they have put most of that in government securities.

3 (3) Cooperative Bank: Kshs 352 billion assets and 15 billion profit. Coop is using digital and agents to contain costs.

4 (5) Standard Chartered: Kshs 264 billion assets and 10.7 billion profit.

5 (4) Barclays: Still keen on growing in Kenya despite parent Barclays having to sell off the Africa unit. Growing at 10% a year, Kshs 264 billion assets and 8.7 billion profit.

6 (8) Diamond Trust: Still growing at 20%, probably benefiting from the fallout at Imperial. Kshs 230 billion assets and 6.2 billion profit.

7 (6) Stanbic: Shed the CFC part of the CFC-Stanbic name 10 years after the merger

8 (7) Commercial Bank of Africa. CBA was the the largest bank by customer numbers, thanks to M-pesa powered M-shwari, but loans are flattening. Kshs 211 billion assets, 5.4 billion profit.

EDIT  9 I&M Bank EDIT 

10 (9) NIC bank. Kshs 156 billion assets, and 4.5 billion profits.

EDIT 10 (13) Citibank: breaks into the top 10. Kshs 116 billion assets, and 4.1 billion profits.

Just out of the top 10, is I&M bank and troubled Chase and National banks. It is important to note that all the top banks, led by KCB, Equity and Coop all embrace a mix of agency and digital/mobile phone banking as a basis for future growth.
$1 = ~Kshs 101

Kenya Top 3 Banks

Yesterday Co-Op Bank announced their 2016, third quarter earnings, and with that we have the numbers in from the top 3 banks.

KCB: Assets: 480 billion, loans 332 billion, deposits 372 billion, pre-tax profit 21.7 billion

Equity: 380 billion, loans 221 billion, deposits 271 billion, pre-tax profit 19.5 billion

Co-Op: 351 billion, loans 226 billion, deposits 256 billion, pre-tax profit 14.9 billion

$1=Kshs 101

Banks adjust mobile phone loans

Mobile banking has really come of age in the last few years. As Carol Musyoka wrote CBA has moved from about 64,000 accounts before M-Shwari to 12.9 million accounts as at December 2015 primarily due to this virtual platform (i.e. M-shwari) without any exponential growth in its branch expansion.

The ability to save and borrow money just by using a few clicks on your phone has been revolutionary. Over at Equity Bank, CEO James Mwangi talks about the application for loans that start at 1 am, with approval being done in a few hours and the loans being disbursed to borrowers phones at 5 a.m. – long before the bank branch doors open at 8 a.m.

The interest rate-capping bill (Njomo) which covers loans has been deemed to cover all bank loans, but this has seen different interpretations at the leading banks that offer dedicated phones banking services:

Apply and get a loan directly on our phone

Apply and get a loan directly on our phone

  • CBA: Have insisted that the 7.5% fee that they charge is not interest, but a facility fee. This has been the case since M-shwari launched back in 2012. The are said to have issued Kshs 40 billion by the end of 2015, and across the border, CBA has got 60,000 mobile bank customers in Uganda in just two months in partnership with MTN (MoKash)
  • Coop Bank: Disburse mobile salary advance loans at 1.16% and business loans at 1.2%. They don’t charge any facilitation fees and loan are payable in 1 to 3 months. (Simply sial *667# to apply for a  #CoopMobileLoan). Coop are reported to be processing about 1,300 loan applications a day up from 250 per day before the rate cap. (70% of its new loan applications this month were requests for refinancing of existing loans). In 2015, the service had 2.7 million users, and 183,000 loans were disbursed.
  • Equity: Adjusted all their loans, including credit cards and mobile  bank loans to 14.5% (Previously “Eazzy Loan” and “Eazzy Loan Plus” products had an interest rate of between 2% and 10% per month) . The loans are said tp have a 1% facilitation fee
  • KCB resumed lending their m-pesa loans after a three-week technical hitch. They have adjust loan rates to 1.16% with a one-off negotiation fee of 2.55% resulting in a total of 3.66%  (including government excise duty tax) on loans. The loan duration has also been reduced to just one month – with no more 3 or 6 month loans.

More and More