KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Valere Nyaboke, Cliffe Dekker Hofmeyr
Digital Banking Kenyan banks and microfinance institutions increas - ingly deliver their services through digital platforms. Customers can open accounts, access and monitor their banking information, and carry out a wide range of transactions – such as funds transfers and bill pay - ments – using mobile phones or other digital devices. Digital Credit Services Non-deposit credit providers (NDCPs) offer a variety of digital credit solutions, including credit facilities, asset financing, buy-now-pay-later arrangements, credit guarantees, pay-as-you-go models, and peer- to-peer lending. These providers typically issue small, short‑term loans to individuals and businesses, with funds disbursed directly to borrowers’ mobile money accounts. Repayment processes are also streamlined, often facilitated through mobile apps or simple USSD codes. Payment Services Payment services encompass the systems and processes that enable financial transactions. They support interactions between businesses, between businesses and customers, and between individual consumers. Key players in this space include the fol - lowing. • Mobile network providers – licensed mobile opera - tors have significantly broadened financial inclusion through mobile money platforms such as M-PESA. • Payment service providers (PSPs) – specialised entities offering payment services such as transac - tion processing and technology‑driven payment solutions. • Banks and money remittance operators – tradi - tional banks and licensed remittance operators facilitate cross‑border transactions. Money remit - tance operators, in particular, enable fund transfers between individuals without requiring either party to hold a traditional bank account. Investment Services Investment service providers in Kenya are increasingly leveraging technology to widen access to investment opportunities. Key offerings include the following.
tion to a stronger focus on regulatory implementa - tion, supervision and enforcement – particularly in higher‑risk verticals such as digital credit and virtual assets. Although VASPA is now in force, the licensing regime will only become operational once the Cabinet Sec - retary for the National Treasury issues implementing regulations. These will follow consultations and advice from sector regulators including the CBK and the Capital Markets Authority (CMA). Recent regulatory communications indicate that the National Treasury is developing these regulations, with licensing set to begin once they are issued, though no firm timeline has been publicly confirmed. Artificial Intelligence in Fintech Products and Services AI adoption in Kenyan financial services is already underway and is expected to deepen over the next 12 months. Key applications include credit scoring and credit decision-making, fraud detection, customer engagement, and process automation. The CBK has published a dedicated Survey on Arti - ficial Intelligence in the Banking Sector, highlighting that institutions are integrating AI into core functions – particularly credit scoring and fraud detection – and emphasising the need for strong governance, respon - sible AI principles and human oversight. In addition, Kenya has released a National AI Strategy (2025–2030), positioning AI adoption – including in financial services – within a framework of responsible deployment and alignment with existing laws such as data protection legislation.
2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models
The Kenyan fintech market is largely driven by busi - ness models centred on digital banking, digital lend - ing, and payment services. Additional sectors such as investment services, insurtech, edtech, and agritech continue to expand as technology adoption increases across the country.
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