Branch International says it is working with the Central Bank of Kenya to develop regulations that will govern the operations of Neobanks in the country.
Neobanks are a new crop of non-bank fintech start-ups that leverage on digital only banking platforms for seamless online operations. They also ride on low or no-fee services.
Despite a well development regulatory framework for the banking, Sacco’s and digital lenders there are no regulations specifically designed for the Neobanks.
East African CEO of Branch International Rose Muturi told The Star that with an increase in the number of Neobanks venturing into Kenya, it is critical to form sub-regulations where these businesses will fall.
“We have engaged the regulator constantly because when we started we didn’t fit on the microfinance banks type of regulation and we were not a commercial bank and we have also shifted from being a digital credit provider,” said Muturi.
She said they have been using the Microfinance Banking Act and are compliant in that regard in terms of capitalisation.
Despite becoming a microbank after acquiring Century Microfinance Bank last year, Branch Microfinance continued to operate as a branchless lender.
Last month, it closed one of the three Century outlets and indicated it would close all the banking halls in quest to go fully digital.
Branch was in January last year granted the go ahead by CBK to transition to a microfinance institution.
This saw the lender acquire 84.89 percent of Century Microfinance Bank at a cost of Sh230 million effectively making it the leading owner.
It began operating as a Neobank on March 1, 2022
Despite investing in a brick and mortar business, Branch says all its operations will be on the digital platform.
According to Founder & CEO, of Branch International Matt Flannery the pioneer Neobank in Kenya will leverage Artificial Intelligence (AI) technology to minimise credit risk.
The firm says the Neobank’s utilization of AI algorithms has propelled it to the forefront of credit risk management, ensuring reliable and responsible lending practices.
“By reducing credit risk with AI algorithms, Branch International ensures responsible lending practices that benefit both individuals and the broader economy,” said Muturi.
