How CBA Bank Is Customizing Their Financial Products To Bring The Youth Into The Banking Fold

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Young people on the move. Image from https://buff.ly/2AaRC9a

Banking is often regarded as a very formal sector. However, the banking industry is growing to offer more to its customers than the usual depositing and withdrawing money. There is a growing need to humanize the relationship between the bank and customer in order to touch and motivate them. This is the drive for The Commercial Bank of Africa’s (CBA Kenya) campaign ‘Bank For Interesting People.’ They aim to connect with people and provide services that offer emotional connection. The idea is to provide products that free up customers time so they can attend to other things.

Youth Trending Lends shows that young customers find the whole banking process boring and do not connect to it. In order to get the youth interested, organizations need to provide products and services that appeal to their fast paced lifestyle. Most young people do not want to spend their time queuing in banks to access their funds or loans. Additionally, with the increasing rate of young entrepreneurs, there is a need to provide them with access to finance to start or expand their business while still teaching them how to handle and invest their money.  A look into CBA Kenya’s products and we can identify services tailored to fit into a young adult’s lifestyle.

 

Young people on the move. Image from https://buff.ly/2AaRC9a

CBA Loop

This is an application that allows you to analyze your income and spending. CBA Kenya launched the product for millennials born after 1980. CBA Loop was introduced to help mentor young adults by providing them with tools to manage their credit. According to the World Bank, 75% of Kenya’s population is under 30 years old.  Due to the high rate of unemployment, most young people turn to entrepreneurial opportunities and CBA Loop can help manage their incomes with or without monthly salaries. Additionally, you can also access other tools from the application including;

  • Sending money. You can send money from your mobile or bank account. It comes at a fee but sending money from one loop account to another is free. This tool also comes with the option of electronic funds transfer and real time gross settlement.
  • Paying Utility Bills. The application is populated with top billers in Kenya including Kenya Power, Multi-choice Services, Nairobi Water and so many others. All the transaction fees are availed on the application so you are able to know how much you are spending. You can also use the ‘buy goods’ option via MPESA without transferring money from your Loop Account to MPESA account.
  • Borrowing loans. Loop customers can borrow loans of up to Kshs 3 million and an overdraft of up to Kshs 100,000. You can access these loans without visiting the bank or having any form of security. Young people have big ideas everyday but lack to access to finance these ideas is a major problem. Having access to unsecured loans is one way to promote young entrepreneurs.
  • Managing finances. Young people live in the fast lane. They are always on the move meaning, they spend a lot of money at a time. CBA Loop ensures you are able to track your spending without having to constantly count your coins. Not to mention the added advantage of carrying around less paper money.
  • Investing. Compiling investment knowledge in order to make smart decisions. The application allows you to set up your investment and estimate the effective rate of return.
  • Set goals and budget. You can set up your goals such as savings, then calculate how intervals of payment depending on how long you want to get to that goal. You can also set a budget depending on your spending habits. The application will constantly remind you when you are about to hit loan limit.
CBA Loop App Image Courtesy of https://i.ytimg.com/vi/FoHSHuppgLI/maxresdefault.jpg

CBA Be More

The Be More Account is a CBA Kenya product offered to people between the ages of 18-29 years. It is designed to accommodate young adults. The opening balance is Kshs 500, operating balance is Kshs 300 and ATM withdrawal charges are Kshs 30. An account holder has access to loans, insurance and investment products. They also have access to CBA Kenya internships and mentorship programs such as The Be More Challenge. The challenge is meant to help young adults to develop their personal and professional skills through competitions, challenges, and mentorships with business leaders.

There are no monthly ledger fees, no recurring charges.  They also have access to unsecured loans up to 3 times your monthly salary. To access loans without having a monthly salary, you need some form of collateral. However, all account holders have access to emergency cash without offering any security. Additionally, more young people are owning homes at a very young age. The Be More account, gives you access 105% Mortgage Financing.

Supply Chain Financing Model

CBA Bank has partnered with Africa Guarantee Fund for Small and Medium Sized Enterprises to provide a financing solution for SME’s. More young people are running SME’s of their own and the prevalent issue is financing solutions. This CBA Partnership brought about this solution also known as Reverse Factoring which provides businesses with access to early payment against invoices with no recourse to credit. Traditionally, this service was offered to suppliers only.  However, it has been extended to corporate customers as long as they have a good credit standing with the bank.

The solution works by having corporate buyers approve and submit their supplier invoices to CBA Kenya then the bank makes payments to suppliers with recourse to corporate buyers. This way, suppliers get their money before the due date. The solution will spur growth among SME’s by availing working capital faster to enable them to finance their projects. This is because SME’s will only incur debt when borrowing for expansion as opposed to paying their suppliers. It will also reduce the burden on procurement and finance teams who deal with suppliers every day. The model is said to be doing well in countries like the USA. According to a study of Cranfield Centre of Logistics and Supply Chain Management, the model boosts a business’s returns, reducing financial risks, improves relationships in the supply chain. CBA also offers LPO financing, distributor finance, and invoice discounting – You can get more details here.

Speaking of CBA loop, have you tried the app? Here are some of the key features – Review: A Look At The CBA Loop App – Unbank Yourself

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