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FinTechs belonging to this area offer traditional banking services in a modern way, usually through online services or mobile applications as well as ancillary services – e.g. enabling customers to manage their giro- or custody-accounts online and in real time or offering e-wallet services. Keywords in this context are also API-Banking or Banking as a Service (BaaS)/ Bank as a Platform (BaaP).
API-Banking:
API stands for application programming interface and is offered to access data banks and to extract and insert information. API-Banking consequently means the access to data banks of banks to offer new and innovative banking applications.
Through these services FinTechs offer services with new functions, e.g. enabling customers to manage their accounts online and in real time.
BaaS – Bank as a Service/BaaP – Bank as a Platform:
The API-based Bank as a Service platform has a full banking licence, but merely serves as the back end for standalone independent FinTechs, which “use” the licence and the back end of the bank to offer new financial services, launch additional financial products or expand into additional markets.
Introduction
Attitude of the country towards online-banking services
Kenya has embraced online banking services with enthusiastic public adoption and progressive regulatory support. The growth of mobile money services like M-PESA, and mobile-first banks like KCB M-Bank, Equitel, and NCBA Loop, reflects strong demand for digital banking among Kenya’s largely underbanked population.
The Central Bank of Kenya (CBK) supports financial inclusion through digital innovation, and its regulatory stance has gradually evolved to accommodate non-traditional banking models, including neo-banks and digital wallets.
With the launch of the Digital Credit Providers (DCP) licensing framework in 2022 and proposed Open Banking guidelines under discussion, Kenya is taking significant steps toward integrating FinTechs into the formal banking system.
Legal affairs
Obligations and requirements to provide online-banking services described above
In Kenya, entities offering full online banking services (e.g., deposit-taking, lending, and account management) must be licensed as banks under the Banking Act (Cap. 488) and regulated by the Central Bank of Kenya (CBK).
Key requirements include:
Incorporation in Kenya and a physical presence.
A minimum core capital of KES 1 billion for commercial banks.
Demonstration of robust governance, IT systems, and risk management.
Submission of detailed business plans and financial projections.
Ongoing compliance with liquidity ratios, capital adequacy, AML/CTF laws, and consumer protection standards.
FinTechs that do not accept deposits (e.g., payments-only apps, wallets, or lending-only platforms) may operate under:
Payment Service Provider (PSP) licenses under the National Payment System Act.
Digital Credit Provider (DCP) licenses.