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Traditional meets Digital: The Role of Fintech in Preserving Kenya’s Financial Traditions.

Ahhh. It’s a lovely day, and you’re seated out in your backyard enjoying the warm sun while going about your financial errands, all on your handy, dandy mobile phone. A few click-clicks here and there, and you smile at the credit you just scored for your next business project. You’re not only smiling at the friendly interest rates tailored just for you by cutting-edge algorithms, no, but also at the fact that you didn’t have to physically drag yourself to a financial institution and stand waiting in line for hours just to be asked for your neighbor’s uncle’s mother-in-law’s birth certificate. You remember the cake you left baking in the oven and make a move to check on it. But then, as you stand, a thought strikes.

 “Hold on there, cowboy, if fintechs are wiggling themselves into your financial life like this, wouldn’t it be a matter of time until the core financial traditions are taken over? Your rights and interests in your daily financial activities; wouldn’t they eventually get dissolved by fintechs? Wouldn’t financial technologies take over the market and erupt into a new system that barely relates to Kenya’s current financial rights and beliefs?”

Relax. This will not result in the events from Will Smith’s I, Robot. Sure, fintechs have revolutionized the financial landscape in the country, bringing up new innovative means of P2P transactions, SME financing, significant financial inclusion, and a whole delicious buffet of benefits proudly brought to you by Mobile money (M-pesa) Machine Learning technologies, Big Data analysis, Artificial Intelligence, to mention but a few. Big shout out to Blockchain as well. However, financial technologies are not here to take and turn over the entire financial system as Kenyans know it. They are here to integrate finance traditions with the digital age. 

Let’s have an inside look at this one. 

Mention a Chama to any Kenyan in the Universe, and they will look at you with a familiarity you get every time you stare into a mirror. For those of us not Kenyans, Chamas are a form of table-banking where members of a certain Chama contribute a fixed amount of money to a common pool. The funds from the pool can then be used to start a business, loaned to one of the members, or invested in any other income-generating activities. 

It’s very healthy to have a burning anxiety over the thought that as financial technologies spread across the country, Chamas will eventually get replaced by the savings and investment platforms to soon be forgotten in history, along with the social security, accountability friendships, and a sense of community that Chamas offer. That is not the case, and the proof is so inside the pudding when I mention Chamasoft or Chumz. These cloud-based platform integrates into the Chama system and offers members a simple and convenient way of managing their Chamas’ activities. It does away with the strenuous paperwork and avoidable human errors. Simply put, the guys at Chumz or Chamasoft do not replace the art and beauty of Chamas. They provide tools that take out the hardships of savings and in Chamas and have them singing ‘Hakuna Matata’ all the way to their goals and ambitions. 

There’s a saying that goes; A loan is an investment and a testament to your belief in yourself. However, I do have to mention that it is a powerful fire. Mismanage it, and boy oh boy, will there be burns. Either way, like the rest of the world, Kenyans find their breakthroughs in loans. This essential financial tradition has existed for ages, providing citizens and businesses with financial capital. Traditionally, there exist established lenders who follow established processes and procedures. These factors offer confidence to both the lenders and borrowers. A borrower can trust the lender, and on the other hand, via the traditional ways of credit scoring, while chipping in one or two collaterals in case things go south, lenders also have their trust issues resolved.

 A restless feeling of uncertainty wavers in the air as financial technologies scooch into the Kenyan loan ecosystem. Do you think the new lending platforms will set up unfavorable procedures and processes for loan acquisition and disbursement, which will overthrow Kenya’s traditional lending practices? There’s no easy answer. Time will tell.

On May 4, 2023, Safaricom announced they would partner with KCB to open a Fuliza ya Biashara platform for businesses to utilize the Fuliza overdraft. In August, KCB said that businesses had tapped a whopping Ksh. 6.2 billion in loans from the Fuliza ya Biashara overdraft service. Kenya’s firstborn and favorite fintech platform, M-pesa, made this possible. 

Along with other players such as Tala, Branch, Lendplus, and Zenka, these fintech platforms utilize Kenya’s already established loan system, carefully carrying along with them the principles and procedures that built the traditional loan system. Kenyans don’t even notice a bump when utilizing the fintech platforms. Otherwise, how else can you explain the Ksh. 6.2 billion in loans?

The interest rates on such fintech platforms won’t get you clawing your hair out while screaming at the sky, nor will the requirements. In fact, these platforms have lubricated the entire process. Let’s not even set out of this page for an example. You seamlessly applied for a loan and instantaneously acquired it with a few touches on your phone. Look at fintechs such as Ndovu. These guys even go past the extent of offering loans and providing wealth management services. A perk from when fintech platforms form a beautiful and harmonious morph with traditional finance. Still, getting the heebie-jeebies on whether Fintech platforms integrate and respect traditional financial beliefs and behaviors?

No? Very well. I can do this all day. 

Let’s look at how payments and money transfers were traditionally handled. 

“Got change for a goat?” 

That is a clause you would hear a few centuries ago. 

“Got a change for a thousand shillings?” 

That clause could wreak havoc on a poor businessman who deposited all his cash into his bank account a few years back.

Yes, you are witnessing a space above. That is the sound of complaining about acquiring loose cash change in the near future. If you haven’t caught up yet, soon there will be no complaining about finding loose change or sadly, contemplating in a dark corner because your briefcase full of cash found a new owner. Financial technologies have replaced such struggles. However, a line is drawn when it comes to the basic rules of making payments and transferring funds. The system that existed in the field of trade is and will always be honored by financial technologies. Platforms like M-pesa, Thunes, and Flutterwave use the basic principles of making payments and money transfers that Kenyan finance traditions thrive in.

Simply put, they digitize the process of transferring funds from one person to another without breaking any of the previous traditions. It is basically transferring funds but with the use of a mobile device. Of course, there are transactional charges, but don’t you think the small percentage slice beats traveling to a financial institution just to send funds to Doe in Russia, who probably needs to buy two tomatoes? Of which might take three to four business days?

There are many other ways to show how fintech platforms integrate and respect traditional financial behaviors and beliefs. These are just some of them that dropped into the spotlight. Financial technologies grab traditional finance, and razor-sharp tech pours both into a beautiful blend of opportunities and solutions that project human civilization into a bright future while preserving and respecting the fundamental essence of humanity’s traditions that pioneer significant milestones. And here in the Silicon Savannah, that’s how things roll. 

You might want to check up on the cake now.

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