Digital lenders are urging policymakers to emulate and adopt regulation standards such as those in the United States and the United Kingdom as financial technology continues to witness an unprecedented rise amid the pandemic.
The outbreak of the COVID-19 pandemic in Kenya this year has led to a sharp rise in electronic commerce and other financial technologies.
Official statistics indicate that in the period between April and June this year, the purchase of goods by customers using mobile wallets topped Kshs 446.5 billion.
According to Zenka Finance Chief Executive Duncun Motanya Kenya stands a chance to reap from the growth of fintech despite challenges such as consumer protection, innovation, and competition that are facing the industry.
“While there is an expectation for the industry to become even more professional and evolve past its start-up phase to a more mature growth phase, we need to learn several lessons from different developed countries, pick and adopt international best practices that will support the growth of digital lending and bolster financial inclusion over the next phases of growth,’’ said Motanya.
Kenya through the Central Bank of Kenya, UNDP, UNCDF, and Switzerland earlier this month launched an initiative to govern BigFintech for what they termed as for greater good.
“With opportunities come risks, particularly of market concentration by BigFintechs. A global discourse on these emerging risks that brings everyone to the table is imperative”, said CBK Governor Patrick Njoroge during the launch of the initiative.
The Digital Lenders Association of Kenya (DLAK) has already identified the need to implement some regulations over and above the current Code of Good Conduct, a set of rules that have been signed and implemented by all the members of DLAK.
“In the United Kingdom, which is considered to have Europe’s most developed financial market and one of the biggest hubs for financial innovation globally the Financial Conduct Authority (FCA) regulates among other non-bank lenders and digital financial providers,’’ Motanya added.
The digital lenders also back a competitive lending market to help lower the costs of scoring and disbursing loans to lenders, and help borrowers access more affordable credit.