Tier one bank Standard Chartered is eyeing a piece of the country’s mobile loans segment pie and following in the footsteps of rival lenders who have ventured into the market in recent years.
KCB Group’s KCB M-Pesa, CBA Bank’s M-Shwari, Equity Group’s Equitel, Co-operative Bank’s M-Co-op Cash, Barclays Bank’s Timiza and HF Group’s Whizz are some of the commercial lender-backed mobile loan apps that already operate in the country.
According to a news report by the Business Daily, StanChart’s Chief Executive Officer Kariuki Ngari insisted that that the bank would imminently venture into the mobile loans segment underlining the popularity of the service in the country.
“It is only a matter of time. It’s something we are working on and looking at to see the best way of doing it-launching mobile loans service. We will have it soon,” Mr Ngari told the Business Daily.
The allure of mobile loans has been on the rise ever since the government through the Central Bank of Kenya introduced the rate capping law in September 2016. The ceiling on interest rates forced banks to limit their credit disbursement services to entities that are not considered risky and capable of defaulting leaving out small and medium businesses to turn to mobile loan lenders in order to circumvent the credit crunch that followed the capping of interest rates.
According to data from research company Consumer Insight Africa, mobile loans have toppled friends and family as the source of quick loans to become the largest source of loans in the past two years.
Mobile loans have however been criticized for their high interest rates which have made more than half a million digital borrowers in the country become blacklisted by credit reference bureaus (CRBs) with the number expected to grow further with the emergence of new players in the market.