The current state of FinTech can make or break careers, deliver great fortune or financial ruin for those who choose to pursue it. The beauty of it is the dynamism of the sector with experimentation and pushing of boundaries as the norm – ask for forgiveness, not permission.

The mixed pot of FinTech covers areas such as traditional banking, standalone credit and lending, savings, investments, co-operative agenda and the digital assets game.

With the challenging economic environment persisting on both the business and Kenya's domestic front, I expect the market to continue sending signals on what they need for the current season.

Innovation in Kenya's finance sector

The agility of innovators is critical in ensuring that they ride the wave of opportunity and adapt to constantly changing market segments, possible regulation and intense competition.

Money moves in the direction of least resistance. This resistance is manifest as costs of acquisition, transaction, collection, storage, distribution, value addition, placement and regulation.

Many of the current FinTech players in Kenya find themselves reducing friction on at least two of these to make their business case. Safaricom, for example, leveraged its agent network to quickly scale distribution and has in the recent past been moving strongly on value addition.

Banks have quite simply re-energized their customer base in an environment where up to 60% of accounts are teetering on nil balances or are even dormant. This approach reduces the costs of acquisition greatly.

Points of resistance

Digital micro lender Branch, recently announced that they were looking to acquire a deposit taking license. For them, with distribution having been achieved, they are probably looking at reducing the cost of capital acquisition through cheap deposits coupled with additional margin on value added services to power their loan book and diversify revenues.

Formidable competitor Tala is going horizontal to reduce transaction and placement costs keeping value in its ecosystem.

Peer-to-Peer borrowing and lending platforms such as Pezesha and UbaPesa dealing with a double sided marketplace must figure out how to offer an affordable service both lender and borrower. For crypto-leveraged players, regulatory quicksand is often the make or break given that most of the others are addressed by embedded benefits of the technology. We did see BitPesa take flight to more favorable markets where they are flourishing.

No one has quite figured out how to remove or mitigate all points of resistance, which means that there is still room for others to come in and create different flavours of value that will resonate with consumers.

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