A fintech lobby group in Kenya has joined the push to have companies operating in the remittance and payment services space acquire licenses following an onslaught from the Central Bank of Kenya (CBK).
The Association of Fintechs in Kenya (AFIK) has said operating under the requisite licenses would support increased adoption to boost the industry.
This comes after the CBK ordered banks to stop dealing with Flutterwave and Chipper Cash since they had no licenses.
“AFIK takes cognizance of the recent directive by the CBK regarding the operations of some industry players who have been offering services without the requisite licensing. We encourage all our members and industry players to ensure compliance with all regulatory requirements,” said AFIK Chairman Ali Hussein Kassim.
Kenya’s homegrown mobile money service has attracted increased innovations and entry of multinational fintechs raking in profits running into billions of shillings.
The fintech innovation ecosystem has grown to include facets of financial services including digital lending, international money remittance, insurance, capital markets and trade finance.
The growth has seen some firms start operations without approvals, posing risks. Flutterwave is currently at the center of a complex money laundering probe by the Assets Recovery Authority (ARA).
The High Court in July froze more than Sh6.2 billion spread in 62 bank accounts belonging to the Nigerian start-up and four Kenyans on fears they are proceeds of card fraud and money laundering.
Mr Kassim said the lack of regulatory requirements threatens to sway customers and draw back gains in innovations. “The growth of the fintech industry in Kenya will be determined by the confidence which we can instill to innovators and investors in fintech,” the association added.
AFIK has also called for the right-touch regulatory oversight to ensure stability in the market and support free entry to encourage competition.