Kenya’s banking sector is undergoing a major transformation as it enters the next phase of digital evolution, one defined by the integration of fintech and insurance. Having pioneered mobile money through M-Pesa, Kenya is now expanding its financial ecosystem into a more connected, data-driven, and inclusive landscape. The National Financial Inclusion Strategy (NFIS) 2025–2028, developed by the Central Bank of Kenya (CBK), outlines this direction, aiming to deepen financial access, enhance product usage, and build sector resilience.
As of 2024, financial inclusion in Kenya stood at 84.8%, supported by widespread mobile connectivity and digital payments. The new NFIS emphasizes not just access but sustainability, bridging rural-urban gaps, empowering MSMEs, and advancing Vision 2030 targets of 30% savings mobilization and a 20% investment-to-GDP ratio. The next phase of banking in Kenya will revolve around collaboration, where banks, fintechs, and insurers jointly create seamless, value-driven services.
Digital Payments at the Core of Transformation
Kenya’s digital payments market continues to expand rapidly, projected to grow at a compound annual growth rate (CAGR) of 14.1% through 2028. This growth is supported by innovations like the Fast Payment System (FPS), which is a CBK-led infrastructure set to launch in 2025. FPS will enable instant, low-cost transactions across platforms, improving interoperability between banks, mobile money operators, and fintech firms.
Traditional commercial banks in Kenya are evolving into digital-first institutions through partnerships with fintech startups. Equity Bank and KCB, for instance, have adopted open APIs that allow developers to build interoperable solutions directly within their ecosystems. This integration supports digital lending, online payments, and financial management tools designed for consumers and SMEs alike.
M-Pesa remains central to Kenya’s digital finance expansion. Its Fintech 2.0 upgrade has increased processing capacity to 6,000 transactions per second, integrating AI-driven fraud detection and embedding services such as loans, savings, and remittances. This upgrade has helped M-Pesa evolve from a payments platform into a comprehensive financial ecosystem, driving growth across Kenya’s digital payments market.
Artificial Intelligence Reshaping Credit and Risk Assessment
AI adoption among Kenyan banks has accelerated significantly. According to a 2025 CBK survey, 45% of commercial banks in Kenya now use AI for credit risk assessment, while 65% of lenders employing AI rely on it for credit scoring. This enables faster, data-based lending decisions and helps reduce over-indebtedness through regulated data-sharing introduced in 2024.
Agent banking also continues to play a key role in extending financial access. With more than 381,000 agents nationwide, these points provide last-mile connectivity for customers in rural areas. Meanwhile, digital credit providers have disbursed KES 76.8 billion ($594 million) through 5.5 million loans since 2022, offering short-term credit to individuals and small businesses.
The integration of AI and open banking technologies reduces operational costs and transaction fees, with peer-to-peer (P2P) transfer costs now capped at KES 10. Mobile money usage in rural areas has reached 91%, demonstrating how digital finance is closing Kenya’s financial inclusion gap.
Insurance Integration: Building Financial Resilience
Insurance integration marks another critical pillar in Kenya’s financial evolution. While insurance penetration remains low at 2.39% of GDP, regulatory reforms are enabling “insurance-as-a-service” models that embed coverage directly into banking and fintech products.
Farmers now access weather-indexed crop insurance through M-Pesa loans offered by Pula, an insurtech company that uses AI and satellite data to assess weather risks. This approach ensures timely compensation for crop loss and strengthens resilience against climate change.
The bancassurance model, where banks distribute insurance products, is expanding rapidly. Partnerships such as bolttech and LOOP are introducing digital health and motor insurance products set for launch in 2025. The NFIS aims to raise insurance uptake to 50% by 2028, prioritizing agricultural bundles, which currently account for 19.3% of insurance coverage. The initiative is expected to improve financial security for farmers, boost productivity, and facilitate access to affordable credit.
Takaful insurance and women-focused funds are also promoting inclusion. Jubilee Insurance’s mobile-based platforms, for example, enable women entrepreneurs to track savings and investments while accessing protection products designed for their needs.
Challenges and Emerging Opportunities
While integration across fintech and insurance offers clear benefits, Kenya faces several challenges. Cybersecurity threats, limited digital literacy, and interoperability gaps between platforms remain barriers to full adoption. Strengthening data protection frameworks and building user awareness will be key to sustaining trust in digital finance.
At the same time, new opportunities are emerging in green and sustainable finance. The adoption of the Kenya Green Finance Taxonomy encourages banks and fintechs to channel funding toward renewable energy, climate-smart agriculture, and environmentally responsible enterprises.
Kenya also continues to benefit from a strong inflow of remittances, over $5 billion annually, which fuels investment in local enterprises. The Credit Guarantee Scheme has also already unlocked KES 6.7 billion for MSMEs, further boosting innovation and risk-sharing in the sector.
Embedded Finance and the Future Outlook
The next phase of banking in Kenya will revolve around “embedded finance,” where banking, payments, and insurance operate seamlessly within daily digital experiences. Rather than existing as standalone products, financial services will be integrated into platforms used for commerce, mobility, and lifestyle applications.
By 2028, the NFIS targets to improve financial health to 39.4%, ensure equitable access for women and youth, and build a resilient financial system that supports national development goals and the Sustainable Development Goals (SDGs).
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.