How Fintechs Are Using Credit Scores to Build New Loan Products in Kenya
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Kenya’s fintech sector, widely known as the “Silicon Savannah,” is transforming lending by leveraging alternative credit scoring to bridge the gap for unbanked and underbanked populations.
By 2025, over 84.8% of Kenyan adults were accessing financial services digitally, opening opportunities for fintechs like Tala, Branch, and M-KOPA to create innovative loan products in Kenya.
These companies are using AI and non-traditional data sources, such as mobile usage, transaction histories, and payment behaviors, to offer fast, low-cost credit without requiring traditional collateral.
Traditional credit scores in Kenya remain unavailable to a significant portion of the population, limiting access to formal loans.
Fintechs counter this by analyzing thousands of alternative data points collected from smartphones, including GPS patterns, contacts, airtime top-ups, and utility bill payments.
This approach generates dynamic, real-time credit scores that reduce default risk and allow approval times to be measured in minutes. Machine learning models cut manual underwriting by up to 80%, enabling scalable loan products like microloans under $50, which are particularly useful for micro-entrepreneurs and small businesses.
Kenyans are increasingly borrowing from digital platforms, with monthly borrowing exceeding 13 billion shillings as of late 2025.
The market is expected to grow further, supported by projections that Kenya’s GDP will recover to around 4.9% in 2026, driven partly by increased credit growth that supports private consumption and investment.
Tala is a prime example of this shift. Its app scans mobile data to evaluate creditworthiness and approves average loans of $36, instantly disbursed to M-Pesa wallets.
Many borrowers, often without bank accounts, use these loans to grow businesses, increasing incomes by approximately 15% per transaction while expanding employment networks.
Tala reports delinquency rates around 5%, demonstrating the effectiveness of alternative credit scoring in serving previously underserved populations.
Branch applies machine learning to device data and repayment history to deliver personalized instant loans without requiring documentation. The platform builds user-specific scores over time, enabling tailored credit limits and repayment schedules.
Branch has expanded access to millions of users, integrating products such as high-yield investments alongside credit offerings.
M-KOPA focuses on pay-as-you-go financing for assets like solar kits and smartphones. Using over a decade of AI-analyzed payment data, M-KOPA builds credit histories for customers who were previously “credit-invisible.”
Customers gradually access larger loans without needing collateral, with M-KOPA disbursing $2 billion to 7 million customers across Africa by 2025, 90% of whom report improved livelihoods.
Other fintechs are innovating further. Patascore offers 30-minute loan approvals for MSMEs, supporting around 400,000 businesses with data-driven credit.
InVenture’s InSight app enables micro-entrepreneurs to generate daily profit-loss statements from mobile money transactions, which feed into credit scoring for partner lenders.
Pezesha uses alternative data to provide peer-to-peer lending for SMEs, while Jumo supports mobile savings and credit hybrids with AI-powered scoring.
The impact of these innovations is far-reaching. Digital credit is lifting incomes, fostering entrepreneurship, and reducing gender gaps in financial access.
By 2024, 79% of Kenyan banks were offering mobile loans, complementing fintech solutions and expanding overall credit availability.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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