KCB Group, Kenya’s largest commercial bank by assets, plans to acquire a minority stake in Pesapal, one of the country’s biggest digital payment service providers, as the lender accelerates its push into fintech amid intensifying competition in the payments space.
In a notice dated October 31, KCB said it had agreed to purchase an undisclosed minority shareholding in Pesapal Limited, a licenced payment service provider regulated by the Central Bank of Kenya (CBK). The deal is subject to regulatory approval.
“The investment sets the stage for the development of innovative payment and other related solutions for Kenya’s small and micro enterprises, enhancing value for shareholders of both Pesapal and KCB,” KCB Group said.
The move comes seven months after KCB’s KES2 billion ($15.4 million) acquisition of a 75% stake in Riverbank Solutions, a Nairobi-based digital payments company that builds revenue collection and payments infrastructure for banks, government agencies, and retailers.
The deal marks a strategic shift for the bank from being a traditional lender toward becoming a platform-based financial services provider, signalling a trend where big banks are investing in payments, data, and embedded finance as future growth engines.
Betting on payments
By investing in Pesapal and Riverbank, KCB is betting that the future of banking in the country lies in owning platforms that move money, as lenders cut bank lending.
In March, KCB chief executive Paul Russo told TechCabal that the investments are part of a plan to build new digital capabilities and deliver “seamless, secure, and innovative” solutions for customers.
“Across the region, payments are expected to have the fastest growth, suggesting an opportunity to innovate,” Russo said.
Pesapal, founded in 2009 by entrepreneur Agosta Liko, processes payments for thousands of businesses across Kenya, Uganda, and Tanzania, and holds a PSP license from the CBK. It enables merchants to accept card and mobile money payments online and in-store, with integrations for Visa, Mastercard, American Express, and M-Pesa.
The company is considered a backbone for e-commerce and service payments in East Africa, supporting sectors from hospitality to education and transport. KCB, which already operates one of Kenya’s largest agent and merchant networks, hopes that the tie-up with Pesapal will deepen integration into the merchant acquiring and SME payments market.
KCB’s shift to fintech investments comes on the back of strong results. The bank’s profit after tax for 2024 grew 64.9% to $477.9 million (KES61.8 billion), driven by strong revenue growth across all business segments. Non-interest income, including earnings from non-banking services, rose 16.5% to $522 million (KES67.5 billion), supported by higher foreign exchange trading income.