IFC backs Co-op Bank’s digitisation with Sh244m

The International Finance Corporation (IFC) is offering technical advisory services to Co-operative Bank in a Sh243.6 million deal intended to support the lender’s digitization of banking services.

The Nairobi Securities Exchange-listed bank is among local lenders that are investing heavily in internet, mobile and agency banking to cut costs and ease customer service.

IFC says the project will build on its existing partnership with Co-op Bank which it has advanced billions of shillings in medium-term loans for onward lending.

The bank, for instance, earlier this year received a $150 million (Sh15.3 billion) seven-year loan from IFC for lending to small firms.

“Following the IFC Digital Bank Diagnostic (June 2017), and as a result of changes in the financial services landscape in Kenya, Co-operative Bank has taken the strategic decision to become a digital bank,” the international financier said in a statement.

Co-op Bank says it has 10,000 agents and 79,218 internet banking customers. It has disbursed more than 700,000 loans through the digital channels.

Expansion of digital banking services has allowed banks to close some of their brick-and-mortar branches and lay off staff.

“The traditional brick and mortar is slowly losing its pivotal role in the industry. In its place, mobile banking, agency banking and electronic payments are taking the centre stage,” Co-op Bank said in its latest sustainability report.

“The migration to this new ‘digital’ space will define the bank of the future; on our part we are responding as appropriate with heavy investments in innovative technological capabilities.”