NAIROBI, Kenya, Mar 6 – Kenyan fintech firm FlashPesa has introduced an artificial intelligence (AI)-driven credit rating system designed to enhance access to mobile loans by providing a more comprehensive assessment of borrowers’ creditworthiness.
The new system leverages advanced data analytics and AI to evaluate clients’ M-PESA statements, analyzing not just cash transactions but also spending habits, recurring payments, and financial behaviors.
This approach allows borrowers with lower traditional credit scores but strong repayment commitment to access higher loan limits.
FlashPesa Business Analyst Sammy Mburu highlighted the shift towards a more inclusive lending model, emphasizing the need to look beyond conventional credit scores when assessing borrowers.
“We previously focused primarily on clients with higher cash flow, which was fine. However, that didn’t always mean they were the best clients, as they also default from time to time,” Mburu said.
“They don’t default because they lack the ability to pay; it’s because they simply don’t want to. Therefore, we came up with the idea of reducing the required credit score to access a loan and adding more filters,” he added.
The AI-powered system evaluates borrowers’ risk levels, financial health, and repayment ability without human interference.
This ensures that individuals who may not qualify for traditional bank loans—such as small business owners and salaried workers—can access higher loan limits at lower interest rates.
The mobile lending sector in Kenya has grown significantly, with the number of licensed Digital Credit Providers (DCPs) reaching 85 as of October 2024, according to the Central Bank of Kenya (CBK).
In 2023, Kenya recorded approximately 62.2 million unique loan issuances, up from 37.8 million in 2019.
However, the total value of these loans declined from Sh2.067 billion in 2019 to Sh1.937 billion in 2023, indicating a shift toward smaller loan amounts as mobile lending platforms proliferate.
Mobile loans have become the dominant form of credit in Kenya, accounting for 52.79% of all active loan accounts, with a total balance of Sh158.8 billion in the first quarter of 2024.
FlashPesa’s AI integration marks a significant step in Kenya’s mobile lending landscape, offering a more accurate and personalized credit assessment model.
This innovation is expected to enhance financial inclusion and set new benchmarks for responsible lending in the region.
