Timiza, Absa Kenya’s virtual banking platform, will be rolled out to other African countries after having a successful run since its launch in 2018.
The Absa Group has declared its ambition to grow its footprint and take advantage of the opportunities on the continent, as part of its new strategy prompted by Barclays Bank plc’s move to reduce its 63% stake in its Africa operations to 15%.
The past two weeks have seen Absa finalise one of the key milestones in the transition – unveiling its newly rebranded (former Barclays) subsidiaries in seven African countries in a series of events and celebrations across the continent.
The last of the celebrations took place in Nairobi in Kenya on Wednesday. It saw the 100-year-old Barclays blue brand making way for Absa’s red, and included the launch of the bank’s new stock symbol on the Nairobi Stock Exchange.
Timiza is a “fully fledged” virtual banking platform that offers various services such as 30-day micro loans, insurance and savings, and works as a bank account. Absa has partnered with Safaricom’s mobile money transfer service M-Pesa, using the platform’s transaction data to determine the loan a customer qualifies for.
“It is run completely apart from our bank,” said Jeremy Awori, Absa Kenya MD.
Awori explained that the app is largely targeted at sole proprietor “hustler” entrepreneurs because they have high-velocity payments and transactions.
In the two years since it was launched, Timiza has gone from processing 5 000 loans a month to 5 000 loans a day.
It has just under five million users.
“We have built and developed the app in Kenya with a local provider [and] due to that success and experience, we are looking at rolling it out to other markets,” said Awori.
In 2019 Kenya was rated the second leading innovation hub in sub-Saharan Africa by the World Intellectual Property Organisation. The country, with three million salaried people versus over ten million entrepreneurs, has democratised access to financial services through fintech.
Today, market leader M-Pesa processes half of Kenya’s GDP through the mobile money transactions made by its over 20 million active users.
The focus on being digitally led for banks has been a no-brainer in a country where transactions between vendors and consumers happen on virtual platforms.
Banks like Absa, which is the third largest bank in Kenya, and competitors such as Equity Group, NCBA Group and KCB, have all created mobile banking apps in partnership with M-Pesa to get a share of the traffic from the telecom provider’s platform while offering more services that would only be available at a bank.
Kenya’s innovation has placed it at the centre of Absa Group’s growth strategy.
“Kenya plays a pivotal role in the Absa strategy across the continent – it’s our second-largest market across the continent but certainly one of the most innovative markets that we have,” said Peter Matlare, Absa Group deputy CEO and chief executive of the bank’s regional operations.
Despite significant downside risks to the country’s economy – such as the locust outbreak currently threatening the agriculture industry in East Africa, fiscal debt that is now 62% of GDP, and increasing political tensions – Kenya is still poised to produce strong economic growth of over 5% in 2020.
This is against a backdrop of weak economic growth that is not projected to be above 1% in Absa’s home market.
Absa Group CEO David Mminele described the macro environment in South Africa as “difficult and delicate”.
“But this is also a good time to position the business and refine where you need to make sure that when the economy eventually recovers, you are well-positioned to benefit,” he added.
Perhaps more optimistically, Mminele said the outlook for the continent is more encouraging and while all its operations are important, the contributions from Kenya, Ghana, Mauritius and Botswana “stand out” .
“We intend to continue to grow our African footprint to become a fully-fledged independent financial services group and that entails by definition that we must continue to invest in these operations,” said Mminele.