Stanbic Holdings, a prominent company based in Kenya, has announced its decision to suspend its plans to establish a financial technology division.
This move comes in response to regulatory delays from the Capital Markets Authority (CMA), which had initially granted permission for the division’s operation in the fourth quarter of 2023.
The decision to halt the establishment of the fintech division was made by the board of directors of Stanbic Holdings. While the organization has not provided specific details regarding the future of the subsidiary, Joshua Oigara, the Chief Executive Officer (CEO) of Stanbic Bank Kenya and South Sudan, confirmed that the proposal has been put on hold for the time being. Oigara emphasized that the company remains open to revisiting the decision in the future if necessary.
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Expansion Plans and Regulatory Approval
Stanbic Holdings had previously disclosed plans to significantly expand its business, considering options such as forming partnerships with or acquiring mobile network operators or fintech companies. The approval from the CMA to establish a fintech subsidiary was received during the fourth quarter of 2023, reflecting the company’s efforts to diversify its offerings and explore new opportunities in the financial technology space.
In line with its expansion strategy, Stanbic Holdings had announced intentions to collaborate with Chinese fintech companies to enhance economic ties between China and Africa. This initiative aimed to facilitate connections between Kenyan merchants and quality suppliers in China while improving transactional efficiency within and outside Kenya. The company’s willingness to engage with fintech partners underscores its commitment to innovation and strategic collaborations.
Standard Bank Group’s Fintech Initiatives
The decision to establish a financial technology subsidiary is consistent with Standard Bank Group’s broader strategy of collaborating with fintech companies across its subsidiaries. Notably, Stanbic IBTC Holdings, a subsidiary of Standard Bank Group based in South Africa, established Zest Payments Limited in 2022 to provide payment solution services. This demonstrates the group’s proactive approach to leveraging technology to enhance its service offerings and drive growth.
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Financial Performance and Outlook
Despite the regulatory challenges related to the fintech division, Stanbic Holdings reported impressive financial results for the year 2023. The company recorded a significant increase in net profit, with earnings reaching Sh12.2 billion ($85.6 million), reflecting a 34% rise. Additionally, Stanbic Bank Kenya and Stanbic South Sudan reported notable increases in net earnings, underscoring the overall strength and resilience of the organization.
While the establishment of the fintech division remains on hold, Stanbic Holdings continues to explore opportunities for growth and innovation in the financial services sector. The company’s commitment to leveraging technology and strategic partnerships positions it for long-term success in the dynamic and evolving landscape of financial technology.