National Assembly Finance and National Planning Committee Chairperson Kuria Kimani has challenged banks to move away from collateral-based lending, warning that the practice continues to lock out millions of young people and entrepreneurs from accessing credit.
Speaking during the African Banking School (EABS) Conference in Diani, Kwale County, Kuria said financial institutions must embrace data analytics and modern risk assessment tools if they are to remain relevant in a rapidly changing financial environment.
“Your banks, your institutions are still using collateral as the main basis of lending. If you continue like this, you will have no one to lend to. These young people do not have the collateral you seek. You must up your game in data analytics and risk profiling,” Kuria stated.
His remarks came as banking industry leaders from across East Africa gathered to discuss the growing impact of digital transformation on lending, risk management and financial inclusion.
Kuria argued that the future of banking lies in leveraging technology and data to evaluate creditworthiness rather than relying heavily on traditional collateral requirements, which often exclude small businesses, startups and young borrowers.
Opening the conference, Central Bank of Kenya Governor Dr. Kamau Thugge emphasized the importance of adopting artificial intelligence responsibly within the banking sector.
Dr. Thugge noted that while AI can improve efficiency and decision-making, it should complement rather than replace human judgment in lending processes.
“AI models should be transparent, explainable, and subject to effective human oversight, and ultimately the responsibility for credit decisions must continue to rest with banks and not algorithms,” he said.
The conference heard that many financial institutions are increasingly turning to alternative sources of data, including mobile money transactions and digital financial records, to assess borrowers who lack traditional credit histories or tangible assets.
Kenya Bankers Association (KBA) Chairman Paul Russo said innovation presents an opportunity to broaden access to financial services while strengthening risk management systems.
“Our ambition should be to explore how innovation, technology, artificial intelligence, alternative data and collaboration can help us better understand risk, reduce it and ultimately make more individuals, businesses and communities bankable,” Russo remarked.
Kenya Bankers Association Chief Executive Officer Raimond Molenje called for deeper regional cooperation among East African countries to strengthen the banking sector and enhance competitiveness.
“We have been playing second to the north and south of Africa as far as banking and the financial landscape is concerned. But we are here to change that landscape. We have to collaborate, we have to work together and forget our boundaries as East Africa and be able to look at ourselves as one region to be able to win,” Molenje said.
The conference concluded with renewed calls for banks to embrace responsible innovation, strengthen regional partnerships and leverage technology to expand financial inclusion while safeguarding stability within the banking system.
Industry leaders agreed that adopting modern credit assessment methods and harnessing alternative data could significantly increase access to financing for underserved populations, particularly youth, entrepreneurs and small businesses that remain excluded from conventional lending models.
