Kenya’s oldest stand-alone mortgage provider HF Group said its digital banking platform dubbed HF Whizz added half a million new subscribers slightly over eight months after launch.
The Nairobi Securities Exchange-listed firm’s newly appointed chief executive, Mr Robert Kibaara, said this underlines the vast potential of mobile banking at a time banks are embracing technology to counter disruptions from financial innovations.
Mr Kibaara, who was poached from NIC Bank last December where he held the director of retail banking, is eyeing to turn around the fortunes of the lender by growing it into a fully-fledged bank, with the company de-emphasising its property investment business that has been hit by a slowdown in the real estate sector.
The strategy, Mr Kibaara said, is anchored on four pillars including “building a digital bank, expansion into new banking segments and maintaining dominance in mortgage finance.”
“Through HF Whizz, we have become accessible to new customer segments that would otherwise be difficult to reach with the brick and mortar model,” said Mr Kibaara.
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“Our digital innovation is customer-led, with products and services geared towards providing an end-to-end digital experience that allows customers to self-serve from wherever they are on the globe.”
HF Whizz, launched in July last year, entered a growing market of commercial bank-backed lending apps such as Commercial Bank of Africa’s M-Shwari, KCB-M-Pesa, Equity’s Equitel, M-Coop Cash and Barclays Timiza.
There has been growing use of fintech in the Kenyan banking sector as technology leads to fundamental changes in how the banking sector operates and delivers value to customers.
“Through the app, the lender has acquired 550,000 new customers, reflecting a 600 per cent jump in customer numbers; disbursed over 1,000 loans per day with the number of disbursements growing daily and registered transactions exceeding Sh2.5 billion,” said the bank.
Other banks are increasingly adopting mobile banking apps, signalling an era of shifting towards digital banking as lenders transfer their services online amid falling customer traffic at branches.
The HF app — available on Google Play and App Store — is part of the predominantly mortgage lender’s diversification strategy.
Through its banking arm, HFC, the group is targeting the growing micro-lending segment which is becoming lucrative for banks as interest rates are not controlled, although risky.
The app enables customers to open an account, access loans, and deposit and transfer cash on mobile phones.
The lender said customers transfer up to Sh200,000 daily, borrow up to Sh50,000 for 7.725 per cent interest, deposit cash via pay bill number 100400, among other services.
Mr Kibaara is implementing the turnaround strategy at a time when the lender has posted lower earnings on the back of rising defaults, forcing it to scale down its lending. Housing Finance posted a net loss of Sh598 million in the year ended December 2018, down from a Sh126 million net profit made in the previous year.
The bank blamed “an unfavourable trading environment”, saying it has led to a slowdown in the real estate sector growth. Housing has been one of Kenya’s fastest growing sectors over the past decade, with returns from real estate outpacing equities and government securities. This attracted high-net worth investors into the sector.
But a dip in prices and the slow uptake of newly-built units have raised fears of renewed pressure on developers, who borrowed to fund for-sale projects, as obligations mature.
HF Group saw its interest income drop by Sh1.08 billion to Sh6.045 billion as it struggled with reduced income from customer loans which dropped by 15 per cent to Sh5.661 billion.
Mr Kibaara said the lender has also diversified into new segments, including diaspora banking, SME banking, institutional banking and personal banking.
“This expansion is informed by the need to reduce the concentration in real estate, which is capital intensive and requires long-term funding,” said the bank.
HF Group also expects to benefit from the government’s push to construct 500,000 affordable homes over the next five years.