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Banking-as-a-service arrives

Ukheshe has partnered with Diamond Trust Bank to deliver “BaaS” in East Africa.

Banking-as-a-Service (BaaS) has arrived on the continent, as embedded finance enabler Ukheshe partners with Diamond Trust Bank (DTB) to provide an innovative platform in East Africa.

BaaS, defined as the provision of banking products and services through third-party distributors, is expected to grow at a compound annual growth rate of 25% in some markets.

“Ukheshe had been looking for a banking partner in the region, and when we met with DTB to explore these opportunities, several synergies immediately came to light,” says Mark Dankworth, president of business development at Ukheshe Africa. “When I first met Jamie Loden, chief operating officer of DTB, he said they were striving to be a technology company with a banking licence. I knew then that we had the technology and DTB had the licence.”

The digital payment landscape is currently dominated by mobile network operators (MNOs), and presents many regulatory challenges to new players, though banks are well-supported by regulators. BaaS partnerships such as these enable banks and fintechs to take on the dominant MNOs, while meeting all regulatory requirements, says Dankworth.

Loden says that the market is also ready for new offers. 

“Consumers are becoming more aware of the options in the market and are starting to favour convenience over cost. This creates new opportunities for agile BaaS models.”

Ukheshe has leveraged the Eclipse platform to develop Wallets-as-a-Service as part of the Astra platform, which was launched by DTB in Kenya, with Uganda and Tanzania to follow in 2024. This will enable fintechs, edtechs and other technology-enabled entities in these regions to work freely with a sponsoring bank, facilitate regulatory approval, and have access to multiple payment products through an API orchestration layer. These products include wallets and a wallet management system, QR payments, payment services, SME solutions, SoftPOS, digital KYC, Virtual and Physical Cards, among other curated digital financial services.

Says Loden: “The partnership is a collaborative way for both DTB and Ukheshe to achieve our organisational strategic goals from a customer acquisition, value packaging, support, and management perspective. DTB will leverage Ukheshe’s technology to drive innovation, improve financial services distribution, and offer services to its customers, while Ukheshe will leverage the bank’s position to be able to operate within the market.”

This fits perfectly into Ukheshe’s vision for its future, says Dankworth.

“The partnership will help Ukheshe meet regulatory requirements to expand to new markets, especially in East Africa, while enabling the bank to rapidly grow its customer base and onboard fintech partners on the Astra platform. The partnership will also form the blueprint for Ukheshe’s future market penetration plans: To better navigate regulatory challenges, go to market quickly, and have an in-country presence.”

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