Century Microfinance Bank: The First Microfinance Institution in Kenya to Acquire a Fintech Company

Interview with Florence Muchiri, CEO of Century Microfinance Bank

Florence Muchiri, can you give us an overview of Century Microfinance Bank’s business?

Century Microfinance Bank opened its doors in 2012 with a vision to support farmers. Agribusiness was going to be a very big thing for the bank. Its green color is part of our brand as it identifies with a green environment. We really wanted, as an organization, to connect with farmers. As time went by, we ventured into two key projects: pig farming and chicken farming. They were good, however, at one point or another with agribusiness and its challenges, we definitely found our footing as a microfinance institution. We learned some lessons and we are moving forward with those lessons learned. We have not dropped the agribusiness, but we have diversified into MSME (Micro, Small and Medium Enterprises) and came up with a wide range of products whereby we do asset financing, trade financing, LPO (local purchase order) financing, and performance bonds. In terms of the main banking, we support the micro entrepreneur with a wide range of products. The bottom line is we want to reach out to these entrepreneurs whether they sell groceries or run any kind of small business. Currently, we have three branches. Two are in Nairobi and the other is up country in a place called Bungoma, which we see as a value chain financing opportunity for agribusiness. We have established a platform that can be used by famers, suppliers, and customers so that everyone can access our products and services online. As much as we may not have a branch footprint, in terms of brick-and-mortar branches, we will have a footprint online and that is the way to go. We want it to be holistic and an entire value chain. We have a small workforce of less than 50, but we want to go big in the technological space.

What makes Century Microfinance Bank stand out?

With us moving into the technological space and doing agribusiness through value chain financing, it gives us a competitive advantage. In traditional lending in Kenya, most banks do credit appraisals manually and that is how we used to do it, but now applicants can apply online. Farmers who might need to buy things like fertilizer or seeds for planting are micro clientele and can go online to apply for the goods and services they need. As we appraise the customer, we can use artificial intelligence as part of the system and that will make the approval process pretty fast. When it comes to suppliers it is the same concept. Let’s say a consumer wants to buy goods in bulk from a farmer, it can all be done online. We are the first microfinance bank in Kenya to acquire a fintech company and therefore we have a speed advantage. We have a window of opportunity to maximize our services by offering products to clients and customers and the market is definitely ripe.

What are your thoughts on the microfinance sector in Kenya? What are the latest news?

The majority of the microfinance institutions began two decades ago and as they mushroomed in Kenya, they focused on the micro clientele. But over time, that space has definitely changed in the sense that the big Tier 1 and Tier 2 commercial banks identified microfinance as their niche and saw there was great potential, which brought about competition. The competition became quite stiff and that was a wake-up call for every microfinance institution. Now all Tier 1, Tier 2 and Tier 3 banks are in the same space. That means we need to up the game and ask ourselves how do we do things differently, and what is it that we can do? That is thanks tothe pandemic because universally it was a wake-up call, especially in Kenya. We need not do business as usual or do things manually anymore. What that meant for us is that we needed to get to the drawing board and ask ourselves where we are at? And we were not the only ones asking ourselves that question. I say that because I have seen other microfinance institutions team up with foreign investors to use their strong financial muscle to offer capital injection. There are a lot of mergers and acquisitions happening in our nation, and in the world of microfinance institutions.

What is your vision for the bank in the short to medium-term? What will be the next developments?

We are looking forward to transitioning the bank to the digital space completely, including the products that we have traditionally been lending to our customers. Before Branch (international finance app) came on board, we had a mobile lending facility, and we hope to enhance it through the acquisition with Branch. They are already doing mobile lending in a big way in Kenya. There is a lot to learn from Branch in regard to their product. The aim is to become a digital bank so that we no longer do things in a manual way, but in a digital way. By the time we are 2 years old in terms of the acquisition, almost every product will be in the digital space. There will be a human touch part of it, especially for large tickets. The small tickets of between 100 dollars and 1,000 dollars are quick and easy to onboard, but above 1,000 dollars, that is an equivalent to 100,000 Kenya shillings, those are facilities we do not offer without security. We require collateral for 1,000 dollars and above and that requires a human element. The government has really warmed up in terms of technology. We have seen a lot of support from the government in that they have digitized the process, which means that we can digitize the process 100%. In the next 2 years, we will be playing in the digital space and digitizing all of our products onto the platform.

What is your inspiration? What drives you?

I connect a lot with the community and that is really what takes my heart as a banker. I love being part of the community and through my banking career, I have connected with the community in terms of supporting my community financially. When people come to the banking hall or to the banking space, they come with issues, and they come with questions asking what can be done for me? Now that I have been in the banking space for more than 20 years, and I’ve worked for different institutions like ABSA Bank where I started my career, I have a rich banking experience which is a value add as I connect with the community to offer them financial advice and financial training. That makes my heart tick every day to know that I am making a difference in a Kenyan life through the world of finances.

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