Kenya’s oldest stand-alone mortgage provider HF Group said Friday its digital banking platform dubbed HF Whizz added half a million new subscribers slightly over eight months after launch.
The Nairobi Securities Exchange-listed firm’s newly appointed chief executive, Mr Robert Kibaara, said this underlines the vast potential of mobile banking at a time banks are embracing technology to counter disruptions from financial innovations.
Mr Kibaara, who was poached from NIC Bank last December where he held the director of retail banking, is eyeing to turn around the fortunes of the lender by growing it into a fully-fledged bank, with the company de-emphasising its property investment business that has been hit by a slowdown in the real estate sector.
The strategy, Mr Kibaara said, is anchored on four pillars including “building a digital bank, expansion into new banking segments and maintaining dominance in mortgage finance.”
“Through HF Whizz, we have become accessible to new customer segments that would otherwise be difficult to reach with the brick and mortar model,” said Mr Kibaara.
“Our digital innovation is customer-led, with products and services geared towards providing an end-to-end digital experience that allows customers to self-serve from wherever they are on the globe.”
HF Whizz, launched in July last year, entered a growing market of commercial bank-backed lending apps such as Commercial Bank of Africa’s M-Shwari, KCB-M-Pesa, Equity’s Equitel, M-Coop Cash and Barclays Timiza.
There has been growing use of fintech in the Kenyan banking sector as technology leads to fundamental changes in how the banking sector operates and delivers value to customers.
“Through the app, the lender has acquired 550,000 new customers, reflecting a 600 per cent jump in customer numbers; disbursed over 1,000 loans per day with the number of disbursements growing daily and registered transactions exceeding Sh2.5 billion,” said the bank.
Other banks are increasingly adopting mobile banking apps, signalling an era of shifting towards digital banking as lenders transfer their services online amid falling customer traffic at branches.
The HF app — available on Google Play and App Store — is part of the predominantly mortgage lender’s diversification strategy.
Through its banking arm, HFC, the group is targeting the growing micro-lending segment which is becoming lucrative for banks as interest rates are not controlled, although risky.
The app enables customers to open an account, access loans, and deposit and transfer cash on mobile phones.
The lender said customers transfer up to Sh200,000 daily, borrow up to Sh50,000 for 7.725 per cent interest, deposit cash via pay bill number 100400, among other services.
Mr Kibaara is implementing the turnaround strategy at a time when the lender has posted lower earnings on the back of rising defaults, forcing it to scale down its lending. Housing Finance posted a net loss of Sh598 million in the year ended December 2018, down from a Sh126 million net profit made in the previous year.
The bank blamed “an unfavourable trading environment”, saying it has led to a slowdown in the real estate sector growth. Housing has been one of Kenya’s fastest growing sectors over the past decade, with returns from real estate outpacing equities and government securities. This attracted high-net worth investors into the sector.
But a dip in prices and the slow uptake of newly-built units have raised fears of renewed pressure on developers, who borrowed to fund for-sale projects, as obligations mature.
HF Group saw its interest income drop by Sh1.08 billion to Sh6.045 billion as it struggled with reduced income from customer loans which dropped by 15 per cent to Sh5.661 billion.
Mr Kibaara said the lender has also diversified into new segments, including diaspora banking, SME banking, institutional banking and personal banking.
“This expansion is informed by the need to reduce the concentration in real estate, which is capital intensive and requires long-term funding,” said the bank.
HF Group also expects to benefit from the government’s push to construct 500,000 affordable homes over the next five years.
World Bank pushes G-20 to extend debt relief to 2021
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.
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.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
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.
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.
Scope Markets Kenya customers to have instant access to global financial markets
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.
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.