Kenyan youth who mostly fall under the millennial generation have the biggest share and are dominating credit dynamics within the fin tech sector.
Data from TransUnion Kenya indicates that many Millennials have access to digital tools and up to 80 percent of the fin tech business is driven by the Millennials and generation X.
“We did a consumer survey last year and one of the things we picked out is that 98 percent of consumers want and believe that taking loan facilities changes their lives or drive their financial growth,” Trans Union Kenya Chief Executive Officer (CEO) Morris Maina stated.
Maina noted that less than 40% of the consumers in the country believe that they have adequate access to credit.
Speaking in Nairobi when he unveiled the Q4 2023 Kenya Credit Industry and Insights Report, Maina said that the cost of credit continues to be high noting that in December 2023, the Central Bank of Kenya (CBK) adjusted the base lending rate to 12.5% from 10.5% thus increasing the cost of credit for the consumers.
Maina said that the report which highlights the key trends on the credit sector for the period of coverage enables all players across the ecosystem gain critical insights and also offers an in -depth analysis of the macroeconomic impact on credit trends in the country.
Maina noted that there were about 39 banks that submit data to the bureau and this is not only done as a requirement but also as a mandate by the CBK.
He added that banks continue to have the lion share in terms of loan and loan balances that is loans that are issued and loan balances that exist at about Sh.5 trillion.
“It is time now to bring those people from the Hustler Fund back into the bureau ecosystem so that they can now stimulate credit beyond what they are getting,” the CEO announced.
He highlighted that one of the challenges that has always been in the banks is getting data analytics or data science as a central function within a bank.
Maina stated that they do not expect the macroeconomic situation both in Kenya and globally to change in a drastic manner as it is going to continue to be volatile.
“What is critical is for the actors and all the players in the industry to adjust their operations, particularly leverage on data and insights in order to ensure that there is continued progress in business environment,” the CEO said.
Trans Union Kenya, Product Manager, Anne Njeru said that when the interest from a bank increases it means that loan installments go up thus reducing the disposable income that people have.
“Lenders and many of the players and fin techs operating banks are trying to balance a very thin line between balancing growth and tightening their credit policies because now people don’t have the disposable income that we had previously,” Njeru noted.
She added that efficiency has to become key in terms of how lenders not only run their operations but also how they target their customers.
By Gathigia Ng’aari
