KCB diversifies MSMEs offering with acquisition of fintech firm

Kenya’s largest bank by assets, KCB Group, has announced a strategic move to bolster its digital capabilities by acquiring a 75 per cent stake in Riverbank Solutions Ltd, a homegrown financial technology (fintech) firm.

The lender said the acquisition, subject to regulatory approvals, aims to expand its digital footprint and enhance its value proposition for micro, small, and medium enterprises (MSMEs) across East Africa. 

This move comes as lenders face increasing pressure to innovate and diversify their revenue streams amid a rapidly evolving financial landscape.

Riverbank Solutions, with operations in Kenya, Uganda, and Rwanda, specialises in payment ecosystems and business solutions. Its technology platform, “Zed 360,” offers MSME clients tools for inventory management, financial reporting, and payroll management.

The firm also provides agency banking services through its “Swipe” platform, revenue collection via “Zizi,” and social payment solutions with “CheckSmart.”

KCB Group Chief Executive Paul Russo said the acquisition aligns with the bank’s strategy to deliver customer-centric digital solutions.

“Across the region, payments are expected to have the fastest growth, suggesting an opportunity to innovate,” Russo said in a statement.

“That’s why we have made this strategic acquisition to enable us to offer a full stack of solutions.”

He said Riverbank’s “Zed 360” platform will be instrumental in enhancing KCB’s service delivery to MSMEs, a critical sector for the region’s economy.

The acquisition will also see KCB consolidate its agent banking channels into a single platform. The move reflects a broader trend among East African lenders to invest in technology to remain competitive.

Banks are increasingly looking to fintech partnerships and acquisitions to accelerate their digital transformation and tap into new market segments.

Kenya is the hub for financial technology in the East Africa region, with many startups and established service providers opting to launch their operations in Nairobi.

This dominance is driven by rapid adoption of technology, especially mobile money, regulatory support and a tech-savvy and youthful population.

Availability of internet across most of the country has also catalysed fintech innovations and drawn global players into the country.

“Kenya has long been considered a leading fintech hub in Africa, with a rapidly growing ecosystem fueled by various factors over the past decade, ranging from a large unbanked population to high mobile phone penetration and supportive government policies,” says the 2024 Kenya Fintech Industry Risk Report by Augusto Research.

“The development of new fintech solutions in areas such as digital lending, insurance, and investment is expected to accelerate in the short to medium term.”

The report says the growth will be supported by Kenya’s vibrant startup scene and a growing pool of tech-savvy consumers.

“The lending (30 per cent) and payments (27 per cent) subsectors dominate Kenya’s fintech industry both in terms of financial performance and subscription numbers,” the researchers said.

Fintech emerged as Kenya’s most prevalent tech startup sub-sector, accounting for 30 per cent of young technology companies in the country.

KCB’s latest financial results showed a robust performance, with profit after tax for the full year 2024 surging by 64.9 per cent to Sh61.8 billion. The bank attributed this growth to strong topline expansion across its businesses.

Mobile banking

The lender also plans to launch a new and enhanced mobile banking platform in Kenya, Tanzania, South Sudan and Burundi. “This mobile platform seeks to address our customer pain points and ease access to financial services with a more robust offering and superior user experience,” the bank said when announcing the 2024 financial results.

KCB in February this year signed up to the Pan-African Payment and Settlement System in its efforts to enhance cross-border trade and financial integration across the continent.

The acquisition of Riverbank is expected to further strengthen KCB’s digital offerings, including seamless transaction and payment services, instant digital lending, and non-banking solutions such as business training. 

KCB also aims to interconnect with partner platforms and fintechs to offer virtual wallets and payment APIs.

Riverbank Solutions, established over 15 years ago, has carved a niche in providing innovative payment solutions in emerging markets. Its mobile-first approach aims to empower organisations to reduce costs and increase efficiency through technology.

The transaction is subject to regulatory approvals by the Central Bank of Kenya and other relevant authorities. Upon completion, Riverbank will become a subsidiary of KCB Group.