The digital banking landscape in Kenya is experiencing a significant shift, with NCBA LOOP at the forefront of this transformation. Originally launched as a digital bank in 2017, LOOP has now evolved into a more comprehensive financial infrastructure model by integrating credit and payments directly into transactions. This shift reflects the global trend towards embedded finance, where banking services seamlessly merge with everyday commercial activities.
LOOP’s innovative model allows users to access loans and make purchases in a single transaction, eliminating the traditional separation between lending and payments. This approach streamlines the process by automatically incorporating credit into transactions, similar to the success of existing services like Safaricom’s M-PESA overdraft facility, Fuliza, and the emerging Buy Now, Pay Later (BNPL) trend in Kenya.
The CEO of LOOP, Eric Muriuki, highlighted their focus on developing solutions and monitoring relevant trends globally. Despite facing competition from well-funded rivals like Ecobank-backed Fingo, Branch MFB, Umba, and Payless, LOOP is diversifying beyond digital banking to embrace a payments and credit infrastructure model.
The integration of payments and credit within LOOP’s framework aligns with a broader industry trend where financial services merge with commercial transactions. This shift towards embedded finance is evident across various sectors, enabled by APIs and improved internet access, leading to the development of sector-specific financial solutions.
Looking ahead, Muriuki predicts that neobanks and traditional banks will continue to coexist, with digital platforms gaining ground in consumer banking, especially among digitally savvy customers. The rise of embedded finance is set to reshape value chains for corporate clients, emphasizing deep integration with digital platforms while traditional banks remain integral to the financial system due to regulatory requirements.
In conclusion, LOOP’s transformation reflects the evolving landscape of Kenya’s financial sector, where banks are transitioning from standalone service providers to integrated financial infrastructure facilitating digital commerce.