M-Pesa, Fintech Businesses Thrive in the Wake of COVID-19

Kevin Namunwa | Aug 23, 2020

The coronavirus pandemic has had its positive and negative effects in multiple sectors in Kenya with the local economy feeling a huge share of the negative effects.

Financial Technology (Fintech), however, has grown immensely in the wake of the global pandemic. The virus created an urgent need for contactless financial solutions, creating a favorable environment for Fintech to grow in the country.

M-PESA, a mobile phone money transfer platform, has been on the forefront of Fintech’s growth in the country.

The mobile money transfer platform has acted as a pace-setter for the creation of other fintech businesses. In Kenya, M-Pesa is the face of Fintech.

Several fintech businesses have thrived in the country because of M-Pesa. Mobile lending, mobile banking, fundraising applications, mobile payment, insure-tech, peer-to-peer lending applications, business-to-business lending, digital payment, online trade, international money transfer, online foreign exchange, online procurement, online betting, and other blockchain applications have all grown because of M-Pesa’s penetration in the market.

The banking sector and the telecoms sector have been leading in Fintech adoption, as evidenced by various banking digital apps and Safaricom’s M-Pesa; however the investment and insurance sectors are lagging behind fintech adoption. Closer home, through our subsidiary, Cytonn Fintech, we have managed to successfully launch the Cytonn Wallet which is powered by Cytonn Money Market Fund (CMMF). The digital wallet has enabled clients to invest, withdraw, and send money instantly to a bank or mobile money account, and still earn an attractive rate of return through our money market fund. The provision of this all-inclusive financial ecosystem increases the efficiency in processing both payments and investments.

Fintech businesses have thrived more in the wake of the pandemic. COVID-19 has created an acute demand for contactless financial solutions. Clients are more aware of the risk of paper money as it changes hands many times over and pin pad systems are touched by hundreds of people.

Furthermore, the World Health Organization boosted Fintech’s growth as it encouraged contactless payments during the pandemic.

The Kenyan government has also played an important role in Fintech’s growth in the country. Through its regulatory bodies and parastatals, the government has been at the forefront to promote Fintech in the country before and during the pandemic.

In the wake of the pandemic, the government through the Central Bank instituted several measures to encourage the use of digital payments. The withdrawal limit for mobile money transactions was pushed from Ksh 70,000 to Ksh 150,000 and transactions of lower than 1,000 were made free.

Fintech is the future and the COVID 19 pandemic has only accelerated its growth. New trends in the Fintech world are developed daily as the World works towards greater digitization of financial services.

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