Kenya leads the world in mobile money as nearly three-quarters of adults have an account, and most of them are actively using those accounts. The growth of digital financial services in Kenya has ushered in significant opportunities and some challenges. As the chief operating officer for Accion Venture Lab portfolio company, Kopo Kopo, Peace Osangir has tackled these opportunities and challenges firsthand. Ahead of the panel at European Microfinance Week (Nov. 14-16) on client protection and digital finance practices from Kenya, Peace answered our questions on her work in inclusive fintech for Kopo Kopo, client protection, and making sure small and medium businesses can benefit from Kenya’s mobile money revolution.

Q: Before coming to Kopo Kopo, you worked in the formal financial sector. What led you to leave that space and come work for a startup serving the small business market?

A: The startup environment provided the opportunity for creativity and innovation that sometimes may be lacking in a formal financial sector. The desire to demystify the challenges of extending credit to small business owners and the interest in testing the applicability of microlending models for individuals on businesses made the venture into the startup world intriguing.

Q: Kenya is a model of success when it comes to digital financial inclusion. What lessons can other countries learn from Kenya about how to make the digital revolution in financial services work for everyone?

A: The regulatory environment needs to be favorable to foster innovation and product enhancements in response to market needs.

Product access channel needs to be simple and available to a majority of the population. In Kenya, USSD is the most preferred channel to reach the greatest percentage of the population due to usability on both feature phones and smartphones.

The product design needs to be intuitive and solve a problem in the market.

Investment in brand building and adhering to service standards is critical in gaining the trust of the market and product adoption.

Cultural fit and cost are also key in driving product usage and growth in digital financial services.

Q: How does the highly digital nature of Kenya’s financial system create unique challenges for client protection?

A: Digitization has made it easier for customers to apply for a service or product without fully understanding the terms and conditions.

Customers are prone to defaulting on credit products due to the faceless nature of the lender, resulting in a high number of customers with adverse listing with the credit reference bureau.

Sharing of login credentials by less tech and information security savvy persons has increased the exposure of individuals and business to fraud.

Q: What steps does Kopo Kopo take to ensure that its customers are protected?

A: Kopo Kopo clearly displays the cost of each service to avoid any surprises. In addition, Kopo Kopo engages the customers in verbal conversations to gauge understanding of its terms and conditions of service.

Kopo Kopo also carefully handles customer data by employing high-level data security protocols.

Kopo Kopo also ensures that all customers are the actual business owner, verifies all instructions on account changes in order to minimize instances of fraud by rogue employees.

All changes to our terms of service are clearly communicated to the customer prior to implementation.

Q: Kopo Kopo works specifically with small business owners. How has Kenya’s digital transformation in financial services affected this segment?

A: Digital transformation has positively affected small business owners, and they are now able to build digital footprints of their business, thus making it possible for the small business owners to access value-add services such as loan and loyalty program.

Digital transformation has also increased the average spend size at business locations as the customer is not limited to cash on hand.

Q: Are there different concerns about client protection serving the small business segment rather than individual consumers?

A: Yes, verification of Know Your Customer details is a bit challenging for small businesses compared to individual customers due to a lack of a centralized validation system. Small business owners are also prone to sharing business registration documents with friends and family, thus further complicating the authentication process.

Small business owners who are not technologically savvy may also share sensitive account management information with other persons to help with using the technology services. This practice makes the customer susceptible to fraud.

Q: We’ve seen that balancing technology with human interaction can often create a better user experience for clients of inclusive fintechs. How does Kopo Kopo integrate human interactions to make the customer journey more accessible for its clients?

A: Kopo Kopo has invested in a Merchant Engagement team that is solely focused on interacting with the customers in their first 180 days to ensure that they fully understand our products, services, and terms of service. In addition, we ensure that all Cash Advance applications are followed up with a phone call to gauge the merchant’s understanding of the credit terms prior to approval. Our dedicated in-house customer support team is always on standby to respond to merchants requests in the shortest time possible. Our goal is to always have an informed and empowered customer.