Digital mobile lending in Kenya is a space that is ever growing, whether the motivation is to push for financial inclusion or to simply provide a service in a neglected space, what’s constant is that the sector is ever growing.
As of September this year, there were over 50 mobile loan facilities, including M-Shwari and KCB M-Pesa. A report by FSD Kenya stated that 29% of all mobile phone owners in Kenya had borrowed from M-Shwari, which is leading in this space followed by KCB M-Pesa which saw 12% of all mobile owners borrow from the service. The other top mobile lenders were Equity Eazzy at 4%, Tala at 1.8% and MCo-op Cash at 1.3%.
Clearly, this is a space that lenders are paying attention to. So it comes as no shock when KCB decided to revamp their mobile lending facility, KCB M-Pesa which can be found within Safaricom’s M-Pesa menu. The upgrades not only bring speed when borrowing, according to the Bank, but it also puts a special focus on savings.
At the moment, KCB M-Pesa has over 1 million active monthly users who borrow approximately 7 billion shillings every month. The newly relaunched platform comes after the Bank migrated to a new system last month, effectively making all the changes possible.
Exact Amount Borrowed
Initially, borrowing from KCB M-Pesa meant that one would actually not receive the exact amount they requested. I remember my first time interacting with the facility, I borrowed 1000 bob only to receive an amount in the nine hundreds because the service had deducted the interest prior to disbursing the loan to me. Well, this is one of the things that have been worked on. The new KCB M-Pesa will be disbursing the full amount requested and bundling the 4.08% interest on top as the refundable amount, just like how the competition does it.
Another way that KCB is playing catchup is with the rollover of defaulted loans. If for one reason or the other, you were not able to repay your loan within the month allowed, KCB M-Pesa will now rollover your loan for another month, but apply additional fees for the late payment.
An interesting feature that we have not yet seen with the competition is top-up loans. This will allow KCB M-Pesa customers to borrow multiple times in the same month without being required to clear their outstanding balance, as long as they borrow within their limit.
For instance, if you have a loan limit of Kes.10,000 and you borrow Kes.7,000, you will be able to borrow additional money as long as it falls below the Kes.3,000 remaining to reach your loan limit, without being required to repay your initial loan.
This will definitely be a game changer and might elicit a reaction from the competition to offer a similar service.
0% Interest Loans
On top of the new features, KCB also announced that they will be running a promotion between 18th December 2018 and 17th January 2019. The promotion will see KCB M-Pesa customers who borrow and repay their loans on the same day, before midnight, get a waiver on the interest, thus they will only repay the amount borrowed with zero percent interest.