The bank said Thursday that it had upgraded the Loop platform to make it possible for customers to apply for loans, a feature that was previously not available to users.
Payment period for the maximum Sh3 million Loop loan is capped at three years.
Launched in March 2017, Loop did not offer loans before the new features were added.
Commercial Bank of Africa (CBA) has launched a digital banking platform that allows its customers to borrow up to Sh3 million – the highest mobile phone loan.
The bank said Thursday that it had upgraded the Loop platform to make it possible for customers to apply for loans, a feature that was previously not available to users.
Payment period for the maximum Sh3 million Loop loan is capped at three years.
Launched in March 2017, Loop did not offer loans before the new features were added. CBA, however, runs another application in partnership with Safaricom’s #ticker:SCOM M-Pesa, known as M-Shwari, which offers maximum loans of Sh20,000 for 30 days.
CBA general manager for new business Eric Muriuki said customers can also access overdrafts of up to Sh100,000 based on their financial track record.
He added that Loop service charges had been revised downwards, with some transaction fees removed to attract more customers.
“Loop-to-Loop transactions and purchase of airtime will be free, payments through Safaricom’s Pay Bill and Buy Goods, will attract no additional bank charges, while the transaction charges for Loop to M-Pesa and ATM withdrawals have been reduced by 44 and 40 per cent respectively,” said Mr Muriuki.
Kenyan lenders have been rapidly adopting technology in response to competition from mobile phone-based services such as Safaricom’s M-Pesa, whose usage has grown exponentially in the past decade.
In March this year, Kenyans transacted Sh337 billion through their mobile phones, compared to just Sh6.7 billion a decade ago in March 2008.
Having initially resisted the mobile money revolution, bank executives now say they are increasingly confident about mobile phone loans since they have suffered default rates of less than 10 per cent.
Kenya pioneered the use of mobile money with M-Pesa in 2007, but the amount of loans disbursed on mobile platforms, including those by big banks such as Equity #ticker:EQTY, Cooperative #ticker:COOP and KCB #ticker:KCB , has been kept relatively low.
Barclays Bank of Kenya #ticker:BBK launched its own app last March and capped its 30-day loans at Sh150,000.
Pressure on banks to use mobile channels to cut costs increased when the government capped lending rates in September 2016, shrinking profit margins.
Competition from mobile phone operators has also seen banks shift their business model towards the online and mobile money space.
The lenders last year launched their own mobile money transfer platform, known as PesaLink, taking the battle for the fast-growing transaction revenues to the doorstep of Safaricom’s M-Pesa.
