Banking-as-a-Service in Kenya: The Complete Guide (2026 Edition)

Banking-as-a-Service (BaaS) allows non-financial companies to offer branded digital banking and financial services by integrating Application Programming Interfaces (APIs) from licensed commercial banks. The bank holds the license, the balance sheet, and the compliance burden. The third-party platform owns the customer relationship and the product experience.

Kenya didn't wait for the global BaaS trend to arrive. M-Pesa built the blueprint over a decade ago — embedded financial rails inside a telecoms product, powering a service that now serves over 30 million users and commands more than 95% of Kenya's mobile money market. What has changed is that licensed commercial banks are now opening that same playbook to outside developers at scale.

Why BaaS is Happening Now in Kenya

Kenya's banking sector is under structural pressure that makes BaaS not just attractive but necessary.

Licensed digital credit providers (DCPs) regulated by the CBK grew from 52 in mid-2024 to 85 in the first half of 2025 — a 63% jump in under twelve months. On July 1, 2025, CBK lifted the moratorium on licensing new commercial banks that had been in place since November 2015, opening the door for greenfield applicants for the first time in a decade.

At the same time, traditional banks face a margin squeeze. Commercial lending rates sit at 13–18% for SMEs under the new risk-based pricing framework anchored on KESONIA (Kenya Shilling Overnight Interbank Average), which CBK introduced in August 2025 to replace the Central Bank Rate as the benchmark for variable-rate loans. Banks that want to grow revenue without simply adding branches are moving into BaaS — opening their infrastructure to fintechs and platforms rather than competing against them.

Over 80% of Kenya's adult population now has access to formal financial services, up from approximately 26% in 2006 — largely through digital channels. The next frontier isn't financial inclusion in the basic access sense. It's depth: savings products, credit, insurance, and investment tools delivered inside platforms people already use daily.

How the BaaS Ecosystem Works

The core model

Traditional banks provide the regulated financial infrastructure — they hold deposits on their balance sheets, maintain capital ratios, and answer to CBK. Third-party companies — fintechs, platforms, SACCOs, e-commerce operators — manage the user-facing experience. The two connect via APIs.

This differs from open banking, which only grants third parties read access to banking data. BaaS goes further: it lets non-bank platforms actually originate and deliver banking products under their own brand, using a licensed bank's infrastructure underneath.

Four ways BaaS gets implemented in practice

License and product sharing. A bank shares its regulatory license and product infrastructure with aggregators, other fintechs, or non-financial companies, which then white-label and distribute the product.

Augmented offerings. Banks and aggregators combine existing products to create bundled financial solutions — a logistics platform that adds invoice financing, for instance, or a SACCO that adds insurance through a bank partner.

Distributor leverage. A platform with deep customer reach (a supermarket chain, a telecom, a rides platform) uses that customer base to offer a distinctive financial proposition using a bank's back end.

Integrated value chains. Banks and distributors create joint propositions by pulling in products and services from multiple providers — the most complex form, and the one that produces the most differentiated end products.

Payment infrastructure underneath it all

Fintechs access M-Pesa, card payments, and bank transfers through APIs from payment gateway companies. PesaLink, operated by IPSL Kenya, provides real-time interbank transaction capabilities connecting banks and digital wallets. It's the infrastructure layer that makes instant settlement between different institutions possible — critical for any BaaS product that needs to move money across the ecosystem.

Key Players in Kenya's BaaS Market

Bank-led initiatives

Co-operative Bank has been one of the most active in formalizing BaaS partnerships. Its deal with Paymenta is the clearest recent example of a tier-1 Kenyan bank signing a structured BaaS arrangement with a digital platform, providing regulatory infrastructure in exchange for distribution reach.

Absa Bank Kenya, NCBA, and KCB have all opened API layers to fintech partners. NCBA's M-Shwari (the savings and credit product built jointly with Safaricom) is Kenya's most used BaaS product by volume — millions of Kenyans accessed formal credit for the first time through a Safaricom interface backed by NCBA's balance sheet. Products like M-Shwari and Fuliza provided millions of Kenyans with their first access to formal credit and savings products.

Fintech aggregators and middleware providers

Cellulant is the largest pan-African payments infrastructure company operating in Kenya. Its Tingg platform connects businesses with 154 payment options across 35 countries and supports 220 million consumers. In Kenya, Cellulant bundles telecom, utility, and banking services into unified digital payment ecosystems for merchants and financial institutions.

Craft Silicon serves over 254 financial institutions across Africa and completed 58 fintech projects in 2025 alone. It provides core banking software and BaaS middleware — particularly relevant to tier-2 and tier-3 Kenyan banks looking to launch digital products without building technology from scratch.

Eclectics International dominates the B2B fintech middleware space, connecting merchants and mobile networks across East Africa.

The SACCO vertical: Kwara

Kenya has over 4,000 registered SACCOs, making the cooperative banking sector one of the largest single verticals for BaaS in the country. Kwara — founded in 2018 by Cynthia Wandia and David Hwan — has built the defining BaaS infrastructure specifically for Kenya's credit unions.

Following a $3 million seed extension and an exclusive digital solutions agreement with KUSCCO (the Kenya Union of Savings & Credit Cooperatives — the national umbrella body), Kwara gained connections to a pool of over 4,000 SACCOs for its BaaS offering. It also wholly acquired IRNET Coop Kenya, a software company and KUSCCO subsidiary, embedding its technology into the existing SACCO cooperative network across the country.

Kwara now serves more than 230 credit unions across four countries and over 200,000 end clients. In 2023 alone, the platform managed an annual transaction volume of EUR 1 billion. Its neobank app grew its user base 35-fold between 2022 and 2023.

The Kwara model is the clearest proof of concept for sector-specific BaaS in Kenya: take an underserved but massive vertical (SACCOs), provide them with digital banking rails they can't build themselves, and let the underlying bank partner hold the regulatory infrastructure.

Use Cases Driving Adoption

Embedded finance in e-commerce and retail

E-commerce platforms and retail apps are integrating virtual wallets and point-of-sale systems directly into their interfaces. The customer never leaves the app to complete a financial transaction. The merchant gets better conversion. The bank gets distribution without building a product.

Digital savings and BNPL lending

Banks are partnering with fintechs to offer Buy Now, Pay Later (BNPL) services and micro-loans targeted at specific consumer segments — gig workers, smallholder farmers, students. The fintech handles onboarding and underwriting data; the bank holds the loan on its balance sheet.

SACCO digitization

Kenya's SACCOs collectively hold hundreds of billions in member deposits and serve millions of Kenyans who use cooperative credit as their primary financial institution. Most were running on paper-based or outdated software systems. BaaS — specifically the Kwara model — lets SACCOs offer mobile banking, instant loan applications, digital deposits, and third-party insurance without becoming technology companies.

Agricultural finance

Agri-platforms with live data on farmer income, crop cycles, and buyer relationships are using BaaS to originate working capital for smallholder farmers at the point of need. A farmer selling avocados through a platform connected to a BaaS bank partner can access a loan against their confirmed purchase order — scored on data a traditional loan officer would never see.

The Core Banking Systems Powering BaaS in Kenya

BaaS doesn't run in a vacuum. Understanding which core banking system sits beneath a BaaS offering determines its speed, flexibility, and regulatory risk. Kenya's market splits between two dominant systems serving different tiers.

Temenos T24 (Transact): The institutional anchor

T24 is the dominant core banking system in Kenya's tier-1 commercial banks. It powers KCB, NCBA (which underpins M-Shwari), and the Central Bank of Kenya itself. It is enterprise-grade, handles hyper-complex multicurrency accounting, treasury operations, and regulatory reporting at massive scale.

T24 is on-premise or private cloud. Implementation timelines run months to years. It's not built for rapid product iteration — but it's built to hold billions in regulated deposits with full CBK compliance. In a BaaS arrangement, T24 is the system of record: the ultimate anchor where the regulated balance sheet lives, even when the customer-facing product is built entirely by a fintech partner.

Mambu: The cloud-native challenger

Mambu is a Software-as-a-Service, API-first cloud platform. No data centers, no multi-year implementation cycles, no proprietary middleware. It connects to external payment engines — M-Pesa, PesaLink, card networks — strictly via REST APIs and webhooks.

In Kenya, Mambu is used by digital-first lenders, microfinance institutions (Platcorp Group operates on it), and tier-1 banks launching standalone digital products that need to move without disturbing the T24 core. A new wallet or loan product can be configured on Mambu in days and exposed to B2B fintech partners immediately.

The dual-core strategy

Rather than ripping out a legacy T24 core — expensive, high-risk, multi-year — several Kenyan banks run both systems simultaneously.

T24 manages traditional corporate clients, retail branches, and CBK regulatory reporting. Mambu runs alongside it to power a digital wallet, a BNPL product, or a BaaS API marketplace for fintech partners. The two systems sync at key data points. The bank gets agility without existential infrastructure risk.

Oracle FLEXCUBE

FLEXCUBE is the other major core banking competitor in Kenya's mid-tier and large bank segment. It is deeply integrated into the Oracle enterprise ecosystem — Oracle database, Oracle middleware, Exadata — and is particularly strong for banks managing complex corporate banking, treasury, and Islamic banking alongside retail. It handles massive transaction volumes with strong compliance automation, but like T24 it requires extensive customization and longer deployment cycles. For BaaS purposes, FLEXCUBE acts similarly to T24: a regulatory anchor, not an agility layer.

The Regulatory Environment

CBK is the primary regulator for commercial banks, and its posture on BaaS and digital finance has evolved significantly.

In December 2024, Kenya enacted the Business Laws (Amendment) Act, which expanded CBK's mandate to include regulation of non-deposit taking credit providers, requiring foreign lenders to register locally and obtain CBK licenses before lending to Kenyan entities. This has tightened access to offshore capital but also clarified the regulatory perimeter: any entity in the credit chain needs to be within CBK's sight.

New minimum core capital requirements mandate KES 10 billion by December 2029, up from KES 1 billion previously — a deliberate consolidation move that will push weaker banks toward mergers, and may accelerate BaaS adoption as smaller banks seek revenue without needing to scale capital-intensive balance sheets.

For BaaS specifically, the key regulatory questions in Kenya remain:

Data sharing under BaaS arrangements. CBK's open banking and data protection guidance is still developing. Before signing any BaaS partnership, both parties need legal clarity on what customer data can flow between the bank and the platform, under what consent framework, and with what security requirements.

Liability allocation. When a BaaS-delivered product fails — a missed payment, a fraud event, a system outage — who is liable to the customer? The bank (license holder) or the platform (customer relationship owner)? This needs explicit contractual resolution, not assumption.

AML/KYC in distributed models. When onboarding happens on a fintech's platform using a bank's infrastructure, AML and KYC responsibility needs clear ownership. CBK holds the bank responsible regardless of where the customer interface sits.

What to Check Before Committing to a BaaS Partner

Settlement speed. Same-day or T+1 is the minimum for any working capital or payments use case. Slower settlement kills the product's value proposition.

API documentation quality. Vague or incomplete documentation means expensive integration later and slower time-to-market. Request a sandbox environment before signing.

Core system underneath. Is the bank running T24, FLEXCUBE, or Mambu? This determines product flexibility, upgrade risk, and your integration complexity.

Pricing transparency. Per-transaction fees compound fast at scale. Model your unit economics at 10x current volume before signing a partnership agreement.

Regulatory clarity on data. Confirm the bank's data sharing posture under CBK's evolving framework. Don't assume — document it in the partnership terms.

Capital adequacy of the bank partner. CBK's stress tests warn that up to 12 banks — mainly tier-3 — could be undercapitalized under adverse scenarios. A bank partner that gets downgraded or forced into a merger mid-partnership is an operational and reputational risk to your product. Stick with tier-1 and well-capitalized tier-2 partners for any serious BaaS arrangement.

The Shift in One Line

Banking is becoming infrastructure, not a destination. Kenya's mobile money ecosystem already proved this a decade ago. BaaS is the next layer: regulated balance sheets and API-accessible banking products available to any platform willing to build on top of them.

The institutions that win the next decade in Kenya won't necessarily be the ones with the most branches. They'll be the ones whose rails other people's products run on — and the platforms smart enough to build on those rails rather than trying to become banks themselves.

Jacob Bengula is a Relationship Manager at Absa Bank Kenya and Founder of Bengula Inc., a finance and business advisory platform. Connect on bengula.co.ke.