An increase in independent digital lending apps in Kenya has seen commercial banks in the East African nation launch similar online platforms to protect their market.

There are up to 25 independent mobile lending apps in Kenya, some unlicensed, which disburse between $0.50 and $1,000 loans to applicants. Popular apps in Kenya include Branch and Tala.

Some 6.5 million Kenyans are hooked to the mobile loans and half of them are repeat borrowers, according to latest data from a joint survey by the Central Bank of Kenya, Kenya National Bureau of Statistics and FSD-Kenya.

The mobile apps charge one-off interest rate of between 7 percent and 10 percent, with the loans payable per month.

The lucrative loan app business has lured banks into the platforms as they also seek to protect their lending business, which is facing stiff competition.

Some of the commercial banks which have been offering loans through apps in the last two years include Kenya Commercial Bank (KCB-Mpesa), Equity Bank (Eazzyloan) and Commercial Bank of Africa (CBA) (Mshwari).

More, however, are joining the fray with the latest entrant being Housing Finance Group, which last week unveiled its platform.

The mortgage lender unveiled the app dubbed HF Whizz that will enable their customers to borrow between 10 dollars and 500 at a monthly interest rate of 1.1 percent.

The loan will attract a facilitation fee of 6.6 percent, bringing to total cost of the borrowing to 7.7 percent, which is same as what the independent loans apps charge.

Other commercial banks charge between 1.5 per cent and 3 per cent facilitation fee on top of the 1.1 to 2 per cent per month interest.

"Our customers will also be able to transfer up to 2,000 dollars a day, in addition to making deposits directly to their bank accounts,” said the bank in a statement.

Agencies