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KCB: Leveraging the future on Fintech and SMEs


In 1896 KCB, Eastern Africa's oldest and largest commercial bank started its operations in Zanzibar as a branch of National Bank of India. The bank extended its operation to Nairobi in 1904, which had become the headquarters of the expanding railway line to Uganda. In 1970 The Government of Kenya acquired majority shareholding and changed the name to Kenya Commercial Bank. Today the Bank is registered under the KCB Group Plc and is the largest bank by assets.

The Bank bagged a few accolades last year, winning 2017 Bank of the year particularly recognized for ‘pursuing sustainable growth and for its efforts at championing financial inclusion’ by Financial Times. The lender was also named the Best Bank in East Africa in the African Banker Awards 2017 in India in 2017.


“Last year we made it to the top 17 banks in the continent, it is important to have the eye of an African Transnational Bank which is looking at building an ecosystem within the region we operate. So we are not going to for example open in Nigeria, that is no our business model, there but rather our model is to build the network of our customer foot print within the East and central Africa where we have got more than 400 million people which is equivalent to the US/Central Europe. Our growth model will not be based upon building branches or opening up new business, or focus will be new acquisitions/mergers in areas we have no presence in then scale up our growth potential.” Joshua Oigara CEO KCB Group

In the last decade the element of certainty and predictability has been hard to come by for companies due to the disruption caused by Fintech, new regulations, young generation dynamics change and the business focusing on being more customer centric like before.

“Last year was stable; we did not see much growth, our loans were up 10 per cent closing Ksh 500 Bn, for the KCB MPESA mobile lending platform we closed $300 Mn with more than 10 million customers. Our margins came down over 60 basis points but they were compensated by the volume. We extended more loans into the consumer space, some sectors of the economy but our mortgage lending, SME and micro enterprises showed negative growth on y/y basis.” he adds

“Last year was stable; we did not see much growth, our loans were up 10 per cent closing Ksh 500 Bn, for the KCB MPESA mobile lending platform we closed $300 Mn
Mr. Oigara is adamant on the removal of interest rate caps with the personal opinion and belief that the interest rate does not solve the challenges faced in the banking industry. On the other hand he agrees banks have had to change their business models with creating new money into mobile lending, creating algorithms for credit scoring for the customers and push payments into the digital space.

“First we advocate the repeal of entire the rate cap, but this doesn’t mean banks go back to the old regime. There’s need for consumer protection guidelines in the financial sector so that the customers don’t feel exploited, so there has to be an element of responsible lending by Banks although this has never been demonstrated by banks in the last 50 years.” Says Mr. Oigara

He says the IFRS 9 model is very complex for the banks whereby the lenders will be required to have a model for each customer. The bank has been building this model since 2010 and has already complied with the accounting standard.

He however adds that with no mechanism in place by the banks then there will be no certainty of the rate cap repeal by the parliamentarians. “There has to be political conversation happening between parliament, national treasury and banks must give alternatives. However we will be ready to give alternatives as an industry as long as we operate in a free market.” He adds

Earlier this year the lender had announced plans to invest Ksh 1.5 billion that was set to be built by Huawei Technologies which would replace the current KCB MPESA platform and enable seamless payments across all ecosystems such as KPLC, hotels. The second phase will enable customers open accounts, make savings and withdrawal and the third phase will bundle all services on a smart device which is basically having a bank in your hands.

“Our app and mobile banking platform is carrying 60 per cent of our transactions, today we are not at the level that we are satisfied as KCB. The platform will scale up our transactions to 20-30 million per day. We will include the customer in the journey as we create the new solution, we have set up an innovation lab that will build the journey with the customer.”

Mr. Oigara is excited about the growth of the banking sector driven by loan growth of up to 10-15 per cent from 2018-2020. The downside of this growth he says will be the no of regulations, interest rate caps, capital adequacy issue and enhanced supervision coming in from the CBK that might hinder growth of the sector. He goes on to say that the Fintechs and startups will slowly push and excluding the financial sector,

“Our capital adequacy ratio will drop by 100-150 basis points, but because we have an internal buffer of 250 points then we are well within our own expectations. We had set aside capital of Ksh 10 billion under statutory loan reserves.

“The future of banking will be on the payment space, if we are not playing in this space we will be limited to traditional services of lending, and as new intelligent lenders with algorithms and machine learning come in to lend to our customers, our portion of that market will start shrinking. We want to be part of this business that will disrupt our traditional businesses.’

The Bank has aligned itself with the Big 4 transformation agenda by the Jubilee government that has been narrowed to housing, security, affordable health-care and manufacturing. KCB has a market share of about 30 per cent in the mortgage sector.
“We looking closely to design a project for 20,000 houses, we are looking at double digit growth in our earnings and net income in the next 4 years” he concludes

KCB: Leveraging the future on Fintech and SMEs 

In 1896 KCB, Eastern Africa's oldest and largest commercial bank started its operations in Zanzibar as a branch of National ...

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