Africa – what’s so special about it
It’s a common knowledge that fintech in Africa is booming. According to a Partech report, 2018 was a monumental year for African tech start-ups, raising a 108% YoY growth in equity funding. This trend is only growing stronger in 2019.
Among all African countries, Nigeria, South Africa and Kenya are the top investment destinations, luring Venture Capital and tempting fintech start-ups to emerge.
No doubt that one of the most significant upsides of Africa’s developing economies is the ability to leapfrog the unnecessary and arduous stages of technological development. They managed to skip the fixed-line technology of the 20th century, left behind harmful and tedious steps of gradual growth and moved straight to the mobile technology of the 21st century. Due to that, it is expected that by 2020, there will be approximately 525 million smartphones in Sub-Saharan Africa.
Such a technological quantum leap became a trigger for rapid development of digital lending platforms across Africa.
Customers grew impatient; they didn’t want to wait in queues to apply for a loan; they began to value their time more and more and wanted to avoid delays in their business operations. Traditional lending shortly became outdated. Fintechs superseded conventional banking and forced the financial sector to speed up the digital transformation. In response to that, digital lenders emerged, conquered the financial market and are now standing their ground when competing with well-rooted traditional banks.
Why Kenya
A country inhabited by young, technology-oriented and open-minded population, with a stable government and private sector appears to be a natural destination for foreign investors. It is one of the most thriving economies in Africa, with 91% of mobile penetration (compared to 80% for the whole continent), internet connectivity rate at the level of 84% and three-quarters of the population under the age of 30 with increasing income and purchasing power. It’s worth mentioning that Kenyan high mobile penetration is not representative of the figures in West Africa or even the rest of the continent.
For more details visit https://www.jumia.co.ke/mobile-report/
Another interesting fact is that the total number of ATMs across the country oscillates around 2,000 and is on the decline. That trend is undoubtedly associated with the increased use of mobile technology and creates excellent opportunities for the emerging fintech industry.
The digital revolution pioneered by M-Pesa 11 years ago resulted in approximately 47.6M active mobile money accounts and is still driving the financial inclusion process in Kenya. Mobile phones have been turning into digital banks, thus covering the “unbanked” with financial services and enabling them to improve their living standards. On the other hand, mobile money has also significantly contributed to the rise of mobile phone penetration across the country.
Portable phones became indispensable devices for everybody, including less educated or living in rural areas. Being deprived of them seems to be more painful nowadays then living without running water or electricity.
Mobile money for everybody – truth or slogan
Despite dynamic technological development and the rise of mobile money apps in Kenya, some people are still locked out of this ecosystem. The estimations show that approximately 5 million Kenyans own feature phones commonly known as “mulika mwizi”. Is it then possible for them to adapt to the pace of advancement and avoid being “excluded”?
Offering loans via USSD is not a common practice on the market; however, some lenders are stepping ahead of the competitors and allow “mulika mwizi” users to apply for a loan via USSD code.
Such an approach is represented by Zenka Finance – a full-stack fintech operating in Kenya since December 2018, offering microloans ranging from 5$ to 20$.
Omnichannel access
Since Zenka aims at empowering customers with tailored financial products, thus enabling them to enhance their financial inclusion, it makes allowances for restraints and hindrances customers have to face.
Therefore, apart from the app (available on Google Play Store and the App Store), Zenka’s loans are accessible through the USSD short code *841# (for more information visit https://zenka.co.ke/).
A recipe on how to stand out on a crowded market
Kenya has been a pioneer in mobile financial services, not to mention mobile money in general. The competition among digital lenders is fierce, and it may seem that there’s no room for new entrants.
Zenka Finance proves this conclusion is a far cry from the truth.
Not only did it dare to launch in the competitive Kenyan market in December 2018, but also managed to convert more than 800,000 Kenyans into its customers in less than nine months. Satisfied customers – we should add; as thanks to their contribution in voting, Zenka won the top award for the most preferred non-banking platform and the 1st runner-up award for the fastest growing non-banking loan platform in the Financial Inclusion Awards ceremony (http://www.finiawards.com/) held at Crown Plaza Hotel, Nairobi on Friday 9th August.
But, what was the key to Zenka’s success?
Without a doubt, the most appreciated feature of Zenka’s offer seems to be its flexibility – the client decides on the payment period ranging from 1 to 61 days, depending on his or her needs. In addition, they may postpone the repayment date thanks to the extension option or apply for an additional amount within their loan limit.
All that is for the asking and at no risk, as Zenka, unlike other competitors, allows the first time borrowers to take their first loan for free, at no cost at all.
As a seamless client experience is essential, Zenka pays heed to it. The faultless application process, fast reimbursement, multi-channel access and 24/7 AI-powered customer care contribute to overall success. But the success wouldn’t be possible if Zenka had not also considered security as a top priority.
To secure the clients’ financial safety, Zenka has developed and implemented a range of sophisticated tools. The customer identification process, as well as creditworthiness evaluation, are based on machine learning algorithms, Credit Bureaus data analysis, internally developed anti-fraud methodologies and dedicated econometric-based scoring models. Before-mentioned measures are taken in the aim of protecting the customers from overborrowing, blacklisting and financial exclusion in the aftermath.
Zenka’s social responsibility manifests itself not only in the meticulous loan verification process but also in the urge to regulate and organize the whole microlending sector. Therefore, in collaboration with other leading microlenders, Zenka has set up the Digital Lenders Association of Kenya (https://www.dlak.co.ke/) – an organization launched to promote industry best practice and drive a coordinated approach in addressing the emerging industry’s pressing issues.
Zenka’s CEO – Robert Masinde, who was appointed the Chairperson of DLAK, says that it’s just the beginning of the incredible business journey and Zenka has much more in store for its customers.
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