Fintechs On Kenya’s Banking Industry: A Disruptive Threat?

Abstract

Fintech is a new technology of financial innovations and solutions which are fueling financial inclusion especially in the developing countries. The digital challenge faced by banks is currently intensifying and the emergence of these alternative non-bank players is creating both opportunities and challenges. FinTechs are creating products and services that are disrupting the incumbents’ advantage by addressing specific customer needs and enabling them to do more with less. Throughout the world, we have seen the great shifts in the banking industry with changes from the use of bank tellers to ATMs to online banking, and then to mobile banking. These shifts have forced some banks in Kenya to close branches due to reduced businesses in those branches and to cut costs. Could banks reverse the trends by collaborating with Fintech’s and leveraging on their strength in technology-driven software, platforms and infrastructure? Or could this be signaling a new era in world payments in which banks can’t cope with? How can the banks work around this challenge? This paper answers these questions and considers the potential threats that Fintechs could bring in to Kenya’s banking industry and tries to draw lessons from previous literature and relate these insights to the topic under discussion.

Key Words: Fintech, Revolution, Innovation, Digitalization, disruptive threat

DOI: 10.7176/EJBM/14-8-09

Publication date: April 30^th 2022