This archive report was first published on 31 October 2019.
As of 2019, six out of ten Kenyans own a smartphone, and the proliferation of internet technologies has created a pool of 30,000 apps accessible to smartphone owners, including tens of digital lending apps.
The Digital Lenders Association of Kenya (DLAK) was established to help customers and lenders by increasing transparency and introducing sanity in the market.
DLAK takes a principle-based approach that rides on good conduct, transparency, ethics, professionalism, and customer centricity, unlike the traditional finance sector which operates on a rule-based regulatory framework.
The association understands that there are critical supply and demand side issues affecting the market, including hidden costs and data privacy, and identity fraud and high default rates for small loans.
DLAK aims to balance the interests of lenders and borrowers to achieve a fair and reasonable standard practice through its Code of Conduct.
Mobile lending is a blue-ocean trend that captures the increased access to credit for previously unbanked consumers in Kenya, with 91% of loans disbursed through mobile handsets.
Major players in the subsector, such as Tala and Branch, have a combined customer base of 1.52 million people, and the expectation is that the number of people borrowing money from android-based apps will skyrocket as more Kenyans purchase smartphones.
DLAK has proposed the preparation of a comprehensive White Paper about the phone-based money lending market and market players, to be followed by recommendations and best practices drawn from around the world.
