Innovative and forward looking, credit only microfinance institution goes digital despite the limitations of its target market

By George Gichuki

To a very large extent, the digital revolution has changed how microfinance institutions (MFIs) do business in Kenya. By embracing digital technology, MFIs can efficiently reach and serve their target clientele comprising mainly the unbanked and under banked. To that end, they have adapted high tech solutions without losing the traditional touch approach in product development and delivery of services. Unlike fintech lenders, MFIs retain the personal touch as a distinctive feature and unique value proposition to their customers. Even as they embrace digital technology, they have ensured that the said proposition has not been lost.


Through the mobile banking technology for instance, MFIs in Kenya have been able to reach the unbanked and under banked population in the rural and far flung areas. This revolutionary technology has enabled MFIs to provide a wide range of financial products and services that include: savings, loans and insurance. They have also been able to provide social products to people who would have otherwise been excluded from formal banking. To start with, technology has been used in the customer on boarding process. Digital onboarding is one the mechanisms that is used in the microfinance sector to register new customers and easily reach the target market. This has brought a lot of convenience in the onboarding process by use of existing data including: the Integrated Persons Registry System (IPRS), credit reference bureaus (CRBs) and mobile network operators (MNOs) among others.

The other benefit of digital technology to MFIs is online loan applications. To that end, customers are able to make loan applications and get disbursement of the same via their mobile phones. Once processed, the loans are sent directly into their mobile wallets and they do not have to visit the MFIs’ branches physically. This has brought a lot of convenience for the customers, besides reducing the laborious manual paper processes. By the same token, customers can repay loans through various automated digital services, which has eliminated the need for risky cash-based transactions.

Thirdly, MFIs have incorporated credit scoring models that are based on the 5Cs of credit (capacity, capital, collateral, conditions and character). This has ensured that high quality loans are efficiently disbursed. It has also helped MFIs to understand their customers better.

Another benefit is that a good number of MFIs are storing and using big data to develop predictive analytics tools that can help their customers to make sound financial decisions. Others are using big data to create new digital products, such as mobile apps that allow customers to manage their finances on the go.

In summary, technology has enhanced business in the microfinance sector by increasing access to financial services, improving efficiency and ensuring transparency and security of transactions.


BIMAS Kenya Limited is one of the leading credit only microfinance institutions in the country. It is headquartered in Embu county. With a huge presence in rural Kenya, BIMAS has thirty nine offices that are located within nineteen counties. Its target market is the economically active low income earners. The overall goal of BIMAS is to realize sustained economic growth and job opportunities in the rural areas, resulting in enhanced social welfare and increased income. Against this background, the lender has embraced technology in its products and services offering. “At BIMAS, we have implemented various technological initiatives that have completely changed the traditional way of doing business bringing efficiency, transparency and convenience to the customers,” says the head of information technology (IT).

Mobile banking is one of the areas where BIMAS has embraced technology.

The lender has a comprehensive mobile banking system with services ranging from registration of customers, balance enquires, full and mini-statements, funds deposits, funds withdrawals and transfers, loan disbursements and utility payments. Additionally, customers are able to make online loan applications. “Our customers are able to easily apply for loans online through the website and the mobile application,” says the head of IT.

Of critical importance, BIMAS understands that its target market is sometimes limited in digital infrastructure. In that respect, while developing solutions, it ensures that they are able to reach all customers, their technological prowess notwithstanding. In that regard, BIMAS has rolled out an agency banking solution where its credit officers through the use of tablets can carry out some transactions on behalf of the customers. Through the agent app, the officers can register customers, make loan applications and initiate deposit requests, besides managing groups’ attendance, transactions, registration and accessing their reports.

BIMAS has also adopted electronic payment systems that include mobile money and e-wallets, allowing customers to make cashless transactions. This has brought a lot of convenience for the customers. By the same token, the lender has automated its processes that include loan disbursements and customer registration with Electronic Document Management Integrations, in order to enhance efficiency in its operations and reduce the cost of doing business.

Finally, BIMAS has integrated credit scoring models into its loaning process to improve risk assessment. This has improved the quality of loans disbursed and has enhanced efficiency in processing of the same.


According to the head of IT, digitization has come with a lot of benefits to the organization. The first one is operational efficiency. Through the use of digital solutions, BIMAS has increased productivity because many time-consuming paper processes have been eliminated and members of staff can therefore spend time on more productive tasks. Automated processes also reduce on human errors, hence improving data integrity. The credit officers are also able to handles more customers than they used to before the digitization.

Digitization has also improved customer loyalty and retention. Through the use of the digital technology (customer self-service and use of tablets by agents) BIMAS is able to deliver a better customer experience and provide quick responses to customers. This has led to improved customer satisfaction and thus better customer lifetime value.

The use of technology has also helped the lender to make better and informed decisions based on actual and more accurate data. “ By use of data analytics, we also get better insights to our customer portfolio that help us derive actionable points easily and thus quicker decisions,” says the head of IT.

By automating various processes and reducing paper work, BIMAS has managed to reduce operational costs by a huge margin. The lender has eliminated the need of physical storage, printing costs, courier and mailing costs as well as staffing costs.

Finally, digitization has enabled BIMAS to improve its data management. For instance, it can easily collect and store vast amounts of data about customers. “By using this data, we are able to analyze customer behaviour and perform accurate credit scoring,” says the head of IT.


Despite benefiting immensely from digitization, BIMAS has experienced a few challenges from that process. The first one is digital gap and literacy. There is a big technology gap among its target market. A number of customers have limited access to internet connections, smart phones or computers and low digital knowledge. This is a major impediment to the lender’s technological initiatives.

The other hurdle according to the head of IT is the complex nature of MFI systems. The said systems have a lot of dynamics that need to be incorporated when they are being implemented. This includes aspects of group management, group loan co-guarantees and product diversities. Occasionally, this delays the implementation process and makes it very expensive.

Thirdly, the security of the IT infrastructure and all the data it contains is also a major challenge. “We continuously review our cyber security strategies in order to safeguard our customers’ data,” says the head of IT.

In the same vein, digitization requires significant investment in technology infrastructure, training costs, mobile devices and internet connection costs among other areas. It is therefore difficult to have all the necessary solutions if one is working with a limited budget.

Finally, BIMAS operates in some very remote areas where digital infrastructure is limited. This includes mobile network coverage and internet connection. It is therefore quite challenging for the lender to deliver digital services in such areas.


In order to address these challenges, BIMAS has put in place measures to enhance digital literacy. To that end, it has made its products customer friendly. “We also develop various reference material for our customers in the languages that they understand,” says the head of IT. “Through our credit officers on the ground, we also offer the necessary training to our customers on the use of our various digital solutions,” he adds.

As a way of addressing the challenge of inadequate IT infrastructure, BIMAS provides customers with alternative power sources through its social products like solar, besides giving them mobile devices in form of loans under a product dubbed ‘digitika.’ “Through our field officers, we also offer the necessary technical support to our customers,” says the head of IT.

Thirdly, in order to efficiently serve the customers residing in areas with network infrastructure challenges, BIMAS has developed applications that allow syncing and storage of data to be used on offline mode.

BIMAS has put in place effective security measures, conducts regular cyber security training to staff, invests in the right security equipment, data encryption and fraud detection systems and involves the customer in all transactional journeys (especially those initiated by the agents), in order to address the challenge of insecurity.



Please enter your comment!
Please enter your name here