Tala takes on Branch with savings product

Tala General Manager, Annstella Mumbi.

Photo credit: File | Bonface Bogita | Nation Media Group

Digital lender Tala Kenya plans to launch a savings product targeting its more than 3.5 million customers, taking on its rival Branch that operates a similar product.

Tala Kenya general manager Annstella Mumbi said the firm plans to pilot the product later this year and launch it early next year as the firm hopes to diversify its business beyond lending.

“Tala will start to move from being a digital lender to almost a full-service financial provider. Customers have been taking credit with us for 10 years, and they now want us to support them in becoming financially healthy,” said Ms Mumbi in an interview.

“We want customers to be able to transact, pay, save, and invest within the Tala app. Hopefully, we should start testing [the savings product] this year and launch by the end of the year or early next year.”

A savings product will rival one of its competitors, Branch Kenya, which allows customers to save and earn interest at prevailing market rates that currently run into double digits for fixed deposits.

Branch in January 2022 acquired an 84.89 percent stake in Century Microfinance Bank Limited in a deal valued at about Sh230 million, giving it room to start taking deposits.

Ms Mumbi said Tala had also weighed the option of acquiring a microfinance institution (MFI) in Kenya but did not see it as a “big priority” for its growth prospects.

“My stand is we don’t yet have a regulatory framework for digital or neobanks for this market, and until this becomes true, the acquisition could not fit into what Tala is looking to do. In that sense, I feel acquiring an MFI would slow us down rather than enable us to do what we would like to,” said Ms Mumbi.

She said Tala and other digital lenders plan to propose changes to the current MFI regulations to allow for neobanks. Neobanks or fintech banks are digital-only financial firms that offer banking services like deposit taking but do not have a physical location.

Tala entered Kenya as Mkopo Rahisi in 2014 but rebranded to its current name in 2016. The firm has over the past 10 years, disbursed a cumulative of about Sh300 billion.

Ms Mumbi said the firm plans to raise more debt and equity, stepping up its annual lending in the next three years.

The Central Bank of Kenya started regulating digital lending in Kenya on the back of public outcry about the pricing of digital loans and the extent to which lenders could go in recovering their money from defaulters.

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