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Banks forum to discuss fintech, cost of credit

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Patrick Njoroge
Central Bank of Kenya (CBK) Governor Patrick Njoroge. FILE PHOTO | NMG 

Commercial banks and policy heads will today meet to examine the role of financial technology (fintech) at a time when sector players are under pressure to innovate and outpace existing traditional brick and mortar systems.

The deliberations will take place at the 7th Annual Research Conference by the Kenya Bankers Association (KBA) and to be presided over by the Central Bank of Kenya (CBK) Governor Patrick Njoroge.

“The conference will explore the impact of Financial Technology as both an enabler and a disrupter in the credit market, delving into the bearing of technology on access and cost of credit, particularly to vulnerable segments of the economy such as low-income households and Micro, Small and Medium Enterprises,” said KBA in a statement.

The forum comes amid growing use of fintech in the banking sector as technology leads to fundamental changes in how the banking sector operates and delivers value to customers.

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The event, themed “Credit Market Dynamics in an Evolving Regulatory and Market Participants’ Environment”, will according to the bankers’ lobby, also assess ways in which the financial system can “promote efficient credit allocation to the economy.”

The meeting comes on the backdrop of recent studies that have urged Kenyan banks to embrace technology to better counter disruptions from financial innovations. Research by SAP Africa, for instance, notes that failure to do so may expose lenders to a tough future marked by thin profits.

According to SAP, upstart fintech firms are introducing new customer-centric innovations at a pace unmatched by the formal traditional banking sector.

It notes while the digital revolution represents a threat to the incumbent banks, they should be wary of focusing on maintaining traditional advantages and rather think of utilising technology to create new opportunities.

Lenders have also been urged to leverage on data collected by fintech firms for mobile lending to build credit scoring systems that can slash the number of bad loans in the sector.

Latest Central Bank data shows that the level of non-performing loans hit a high of 12.7 per cent in August from 12 per cent in July.

Some lenders like Equity Group Holdings are betting on fintech to give it competitive edge with the launch of subsidiary Finserve Africa Ltd.

Analysts have argued that banks should position themselves as useful partners for fintech firms or in some cases, worthy adversaries.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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