KCB Group has inked an agreement to acquire a majority stake in an IT firm associated with former Football Kenya Federation president Nick Mwendwa, in a deal insiders said will be worth about Sh2 billion.
Riverbank Solutions, the financial technology firm, was founded by Mr Mwendwa 15 years ago.
In the agreement, KCB Group, which is listed on the Nairobi Securities Exchange (NSE), will acquire a 75 percent stake in the Nairobi-based digital payments firm.
Once the deal is completed, Riverbank will become KCB Group’s 13th subsidiary, as the listed company pivots from traditional banking terrain into non-banking solutions.
It was not clear whether Mr Mwendwa, who remains with a 25 percent stake in Riverbank, will be retained as the chief executive officer of KCB Group’s newest subsidiary.
Since its inception in 2010, Riverbank has focused on revenue collection partnerships with county governments, including Kisumu and Migori.
Riverbank provides payment solutions for various sectors, including banking, micro-finance, manufacturing, retail, and the military.
Its services include mobile payment innovations, Point of Sale (POS) terminal applications, and card solutions. POS terminal applications are software programmes that enable businesses to process payments, manage transactions, and handle inventory, often running on devices like tablets or smartphones, offering features like online order management and customer relationship tools.
KCB hopes to tap into Riverbank’s capabilities in payment and non-banking solutions.
Riverbank also has a footprint in banking agencies, social payments, and business solutions in Kenya, Uganda, and Rwanda.
“Across the region, payments are expected to have the fastest growth, suggesting an opportunity to innovate. That’s why we have made this strategic acquisition to enable us to offer a full stack of solutions,” said KCB Group CEO Paul Russo.
“Riverbank is not new to us as they have been providing us with Agency Banking Solutions since 2013. Additionally, we see true value in the Zed 360 platform under which we expect to step up the delivery of our value proposition to MSMEs and SMEs as well as in harnessing the ecosystem banking.”
KCB Group’s profit after tax for the full year 2024 grew by 64.9 percent to Sh61.8 billion on the back of strong revenue expansion across all businesses. This was a rise from Sh37.5 billion reported in a similar period last year.
Non-interest income, where earnings from non-banking services are captured, grew at a slower rate of 16.5 percent to Sh67.5 billion in the prior year on higher foreign exchange trading income.
“The group strives to be more agile by re-thinking our customer-centered value propositions and leveraging group capabilities in the markets we operate. Our focus is on ensuring we have fit-for-purpose technology that drives seamless, reliable, secure, and innovative solutions for our customers,” said Mr Russo when he announced KCB’s financial results for last year.
In the past decade, KCB has been engaged in at least three acquisitions, largely reflecting its strategy to expand its regional presence and diversify its operations.
In 2022, KCB Group acquired an 85 percent stake in Trust Merchant Bank (TMB) in the Democratic Republic of Congo (DRC), significantly expanding its presence in the Central African market.
It also acquired Atlas Mara Limited’s banking operations in Rwanda and Tanzania. This deal involved the acquisition of Banque Populaire du Rwanda Plc (BPR) and African Banking Corporation Tanzania (BancABC), strengthening KCB’s presence in East Africa.
In 2019, KCB acquired National Bank of Kenya (NBK), though it has since agreed to sell it to Access Bank of Nigeria.
However, with the acquisition of Riverbank, the indication is that KCB is moving into new areas of digital payments, whose growth in recent times has been significant. The acquisition will see KCB consolidate its agent banking channels into one platform.
KCB and Riverbank will have an opportunity to deepen revenue collection partnerships with counties.
Revenue collection remains a prime area for both counties and service providers amid projections that billions of shillings in potential revenue goes uncollected every year. Projections by the Commission on Revenue Allocation show that county governments have the potential to generate Sh260 billion annually in own-source revenue but continue to underperform.
Counties have blamed the underperformance on a weak workforce to enforce revenue collection, corrupt officials, and the use of outdated systems like valuation rolls that do not reflect the appreciation of land and houses in the market.
Dismal internal revenue collections have pushed counties to rely on transfers from the Treasury to pay salaries and deliver basic services like health and the construction of roads.
