NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Over the past decade and half, digital innovations have transformed the financial sector in Kenya, generating significant benefits for consumers and the economy. As a result of the digital transformation, customers – many of whom were financially excluded or underserved – can now borrow loans, pay bills, transfer money and access their bank statements easily using their computer or mobile phone. This so-called financial inclusion miracle has mainly been driven by mobile money; as such, many of these digital financial services are based on M-Pesa, the revolutionary mobile money service launched in 2007 by Safaricom.

However, the positive implications for increased financial inclusion and inclusive growth through the Digital Financial Space (DFS) are tempered by the potential risks to client protection. Evidence from research suggests that consumer welfare is compromised by lack of effective disclosure of prices and key terms, inadequate dispute resolution mechanisms, fraud and abusive practices.

Photo courtesy of Simon Berry.