Delays in clearing digital lenders sparks jitters

Kenya's digital lending market is currently facing uncertainty and frustration as the Central Bank has prolonged the review period for issuing licenses to the over 300 operators in the market. This delay has impacted confidence among industry players, stakeholders, and consumers. CNBC Africa spoke to Mumbi Annstella from Tala to shed light on the implications for consumers and the sector's outlook. The application review process, initially rapid, resulted in the approval of 10 licenses last year. However, due to the large number of submissions, particularly detailed applications from established players like Tala, the review process has significantly lengthened. The Central Bank is grappling with the overwhelming number of applications, leading to delays in the licensing process. While this has dampened industry confidence, Tala remains supportive of regulatory efforts and is actively engaged in educating partners and customers on the unfolding regulatory landscape. The delayed licensing process has triggered concerns among market players about the impact on consumer credit access. However, Tala reassures its customers that, as an existing operator who submitted the application before the deadline, it can continue offering credit services. Despite the ongoing uncertainty, Tala maintains an optimistic outlook, emphasizing its commitment to guiding customers through the transition to a regulated environment. Tala reports stable credit uptake metrics, with a significant portion of its customer base comprising repeat users. Over the past eight years, Tala has facilitated over $1.5 billion in credit disbursements and continues to witness customer loyalty. While the regulatory developments may trigger some customer apprehension, Tala remains proactive in addressing concerns and providing personalized support to its users. The Central Bank is working diligently to expedite the licensing process, acknowledging that not all digital lenders may meet the regulatory thresholds. The industry anticipates a 'cleanup' of rogue lenders, paving the way for compliant players to thrive. As the sector undergoes transformation, Tala remains focused on sustaining its customer-centric approach and ensuring regulatory compliance. Looking ahead to 2023, Tala anticipates a growing FinTech ecosystem characterized by increased collaboration between traditional banks and digital lenders. The democratization of financial services drives innovation and spurs competition, benefiting consumers through enhanced service delivery. Tala views the digitization efforts of traditional banks positively, recognizing the potential for bridging the gap between FinTechs and banks. By embracing flexibility and choice in credit offerings, Tala aims to stay ahead of market trends and meet evolving consumer needs. As Kenya's digital lending market navigates regulatory challenges and embraces technological advancements, players like Tala remain resilient and adaptive, positioning themselves for sustainable growth and consumer empowerment.