Faulu Microfinance Bank has embarked on a significant strategic shift aimed at enhancing its digital banking services. With a substantial investment of Sh900 million from its parent company, Old Mutual, Faulu plans to realign its distribution channels and human capital to drive sustainable growth and solidify its position as a leading digital finance provider.

Strategic Refocus and Investment

On July 5, 2024, Faulu Microfinance Bank announced its business refocus, which involves a significant boost to its digital banking capabilities. This move is part of a broader strategy to transform Faulu into a robust traders' bank and digital finance provider. CEO Julius Ouma highlighted the bank's commitment to becoming a leader in the digital finance space, stating, “Over the last 18 months, we have made significant investments in enhancing our digital capabilities. We are eager to become a leader in the digital finance space.”

Investment from Old Mutual

Faulu has received over Sh900 million from Old Mutual to bolster its operations and reposition its business model for long-term growth. Ouma emphasized the importance of this financial support, saying, “We will be leveraging the support of our Holding company, Old Mutual, who have committed over Sh900 million towards these operating model enhancements, to reposition Faulu as the digital bank of now.”

Distribution Channels and MSME Support

In line with its new business model, Faulu is set to review and enhance its distribution channels. This strategy is supported by an active agency network of more than 70 agents, aimed at increasing accessibility and efficiency. The bank's strategic decision to refine its distribution channels is expected to improve customer service and operational effectiveness.

Growing MSME Support

Faulu also plans to expand its support for Micro, Small, and Medium Enterprises (MSMEs). Recognizing the critical role MSMEs play in the economy, Faulu aims to provide more convenient transactional services and grow its investment in this sector. “We see a great opportunity to grow our investment and support amongst MSMEs as they represent the life blood of our economy,” noted Ouma.

Digital Lending and Strategic Partnerships

Over the past year, Faulu has collaborated with strategic partners to offer working capital facilities to MSMEs through a flagship digital lending platform. This initiative underscores Faulu's commitment to providing accessible and efficient financial services to its customers. “We will also be providing more convenient transactional services across the board,” added Ouma.

Historical Context and Future Vision

Established over 30 years ago, Faulu Microfinance Bank has become one of Kenya’s most recognizable microfinance institutions. As part of the Old Mutual East Africa Holdings Group, Faulu's business refocus responds to growing customer demand for digital services and the need to reduce costs and enhance competitiveness.

Support from Old Mutual

Old Mutual Holdings CEO, Arthur Oginga, expressed strong support for Faulu’s strategic changes. “With this change, we are both enhancing the Faulu service offering to our existing and future customer network, as well as positioning the business to deliver more value sustainably. Faulu has the full backing of Old Mutual in these endeavours, and we are confident that the refocus will drive shared value for all our stakeholders.”

Communication and Implementation

Faulu plans to communicate the details of these enhancements to customers and stakeholders in the coming days. The bank expects these changes to be fully operational within six months. Chairman George Maina expressed confidence in the operational announcements, stating, “This refocus is also in line with our purpose of being our customers’ most trusted financial partner and helping them achieve their financial goals. It is also critical to the bank’s ongoing competitiveness in an ever-expanding financial services sector in Kenya."