What happened

The Central Bank of Kenya (CBK) released a quarterly sector report that notes a clear trend: many Kenyan commercial banks are quietly evolving into fintech‑like platforms. The document, published on the CBK website in August 2024, highlights that banks are expanding digital product suites, integrating application programming interfaces (APIs), and partnering with technology firms to offer services that were once the sole domain of pure‑play fintech companies. While the report does not provide a single headline figure, it cites a rise in the number of banks offering mobile‑first account opening, real‑time payments and data‑driven credit scoring tools.

Context and background

Kenya’s financial ecosystem has long been dominated by mobile money giants such as M‑Pay and Airtel Money, which pioneered instant person‑to‑person transfers and small‑ticket payments. Over the past decade, the CBK has encouraged banks to digitise their operations, issuing guidelines on open banking, digital identity verification and cyber‑security standards. In response, large banks like Kenya Commercial Bank (KCB), Equity Bank and Co‑operative Bank have launched dedicated digital divisions, hired tech talent and invested in cloud infrastructure. The CBK report cites these strategic moves as evidence that banks are no longer merely custodians of deposits but are becoming platforms that host third‑party services.

Several regulatory milestones have paved the way for this transformation. In 2022, the CBK introduced the “Open Banking Framework,” allowing banks to share customer‑permitted data with authorised fintech providers via secure APIs. The framework was designed to foster competition, improve financial inclusion and reduce the cost of credit for small businesses. Following the framework, banks began rolling out sandbox environments where startups can test new products under regulatory supervision. By mid‑2023, the CBK reported that over 30 fintech solutions had been piloted within bank ecosystems, ranging from invoice financing to AI‑driven risk assessment.

The shift also reflects broader market forces. Kenyan consumers now expect seamless digital experiences comparable to those offered by e‑commerce platforms. According to a 2023 survey by the Communications Authority, more than 70 % of urban smartphone users preferred banking apps that could handle everything from bill payment to loan applications without visiting a branch. To retain relevance, banks have accelerated the development of omnichannel platforms that combine traditional branch services with mobile‑first features. This convergence is why the CBK’s latest report describes the phenomenon as banks “quietly turning into fintechs.”

Compared with what is normal

Historically, Kenyan banks focused on brick‑and‑mortar branches, manual loan processing and limited digital channels. The average bank in 2015 offered only basic online banking, with mobile app adoption below 30 % among customers. Today, the CBK notes that more than 85 % of the major banks have fully functional mobile applications, and over half of those apps support API‑based services for third‑party developers. The following points illustrate the change:

• Branch‑to‑digital ratio: In 2015, roughly one digital transaction was recorded for every three in‑branch visits; by 2024 the ratio has flipped to three digital transactions for every in‑branch visit.
• Loan approval speed: Traditional loan cycles took 30‑45 days; fintech‑enabled scoring now reduces that to under seven days for qualifying SMEs.
• API partnerships: In 2018, fewer than five banks had any open API; the 2024 report lists twelve banks with active API marketplaces.

Why it matters

For Kenyan SMEs, the bank‑as‑fintech model opens new avenues for financing, cash‑flow management and data‑driven decision‑making. Real‑time payments reduce the lag between sales and cash receipt, while API‑linked accounting tools can automatically reconcile bank statements, lowering bookkeeping errors. Moreover, AI‑based credit scoring that leverages transaction histories can broaden access to working‑capital loans for businesses that lack extensive collateral. However, the convergence also raises concerns about data privacy and cyber‑risk. As banks share more customer data with third‑party providers, SMEs must ensure that their partners adhere to the CBK’s data‑protection standards.

Practical steps

• Review your bank’s digital offerings: Log into your bank’s mobile app or portal and check for new services such as API access, instant loan applications or integrated accounting modules.
• Strengthen cyber hygiene: Update passwords regularly, enable two‑factor authentication and verify that any fintech partner you use is registered with the CBK.
• Explore fintech integrations: If you use accounting software, look for bank‑provided connectors that can automate transaction feeds and reconcile statements.
• Assess financing options: Compare traditional bank loans with fintech‑enabled products that promise faster approval, keeping an eye on interest rates and fees.
• Stay informed on regulatory updates: Subscribe to CBK newsletters or follow their social media channels to catch any changes to open‑banking guidelines that could affect your business.

Beavoren Ventures’ Financial Management & Analysis service can help SMEs navigate this evolving landscape, from selecting the right digital banking tools to ensuring compliance with CBK data‑security requirements.

Talk to our team at Beavoren Ventures - info@beavorenventures.co.ke - to set up your systems correctly.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.