The government has sanctioned a study on mobile money practices with a view to establishing a level playing field in the fast-growing subsector.
The study ordered by the Competition Authority of Kenya (CAK) seeks to authenticate reports provided by digital credit providers to credit reference bureaus on whether the providers deliberately release information on bad borrowers while concealing information on good borrowers much to their advantage.
This has seen ‘bad’ borrowers access loans elsewhere while ‘good’ borrowers are denied access to loans in other financial institutions since they lack access to any past credit information.
In a gazette notice published last Friday, the authority said that the study will establish whether consumers have been denied information on their mobile financial activities that could enable them get loans elsewhere.
“It will assess if there exists restrictions on consumers’ use of their own digital transactional data and provision of the same to third parties for commercial use.
“It will also assess current practices where transactional data is sold to third parties by mobile money providers for award of credit scores without consumer consent,” it says.
PURCHASE CREDIT INFORMATION
Kenya has recently seen emergence of digital credit providers who reportedly purchase credit information on probable clients and use the same to determine a borrowers’ creditworthiness.
The appointment of the consultant comes hardly days after Safaricom introduced a new service offering its M-Pesa customers bi-annual financial statements free of charge.
The authority said it would also look into banking practices that make it impossible for clients to switch from one bank to another with ease as well as establish why customers switch.
“We want to explore and establish if there are any barriers to bank customers switching providers, if customers are aware of any alternatives, the ability to access information on switching, account closure practices and any behavioural biases that hinder customers from switching,” it said.
The planned study will also determine how the identified barriers impact on market development and customer choice.
It will also seek to establish the extent to which the barriers identified create an uneven playing field in the banking arena.