Inside Tala’s next decade: Interview with General Manager Annstella Mumbi

In the last 10 years, Tala has established a presence across key emerging markets - Kenya, The Philippines, Mexico and India, serving 9 million customers globally (3.5 million customers in Kenya) and disbursing over $5 billion in loans ($2 billion in Kenya)

According to Tala's General Manager Annstella Mumbi, the firm plans to expand to Tanzania and Uganda. Photo/ Courtesy

Tala, a mobile lending platform, has transformed the way Kenyans access credit by leveraging the power of smartphones and data-driven technology.

Since its launch in 2014, Tala has revolutionized mobile lending in Kenya, offering quick, accessible, and unsecured loans to millions of people who previously lacked access to formal financial services.

What set Tala apart from traditional lenders was its use of mobile phone data to assess customers’ credit risk. Instead of relying on conventional metrics like credit scores or bank statements, Tala uses smartphone data such as SMS logs, contact lists, app usage, and transaction history to create a detailed profile of a borrower’s financial behavior.

This data-driven approach allows Tala to provide instant loans to individuals who would otherwise be excluded from the formal financial sector.

By applying machine learning algorithms, Tala can quickly assess the creditworthiness of applicants and offer loans ranging from as little as KSh 500 (about $4) to KSh 50,000 ($450). Users receive their loans directly to their mobile money accounts, bypassing the need for physical bank branches and lengthy approval processes.

Tala’s entry into the Kenyan market coincided with the rise of mobile money platforms like M-Pesa, which made digital payments and transfers accessible to millions. By offering loans through mobile phones, Tala expanded financial inclusion, providing access to credit for individuals who were traditionally unbanked or underbanked, such as informal traders, small business owners, and low-income earners.

For many Kenyans, accessing credit from banks or microfinance institutions was challenging due to strict requirements, including collateral or guarantors. Tala’s ability to offer unsecured loans to individuals without formal financial records democratized access to credit, empowering people to finance small businesses, cover emergency expenses, or meet personal needs.

Faustine Ngila caught up with the company’s General Manager, Annstella Mumbi and here’ the interview, edited for clarity and congruence:

  1. Reflecting on the decade, what are the most significant milestones and challenges that the company has experienced to this point?

Tala was a market pioneer in digital credit in 2014. Our mission is to democratize access to credit for the populations that have traditionally been excluded from the formal financial ecosystem by leveraging alternative data to underwrite.

In the last 10 years, Tala has established a presence across key emerging markets i.e., Kenya, The Philippines, Mexico and India, serving 9 million customers globally (3.5 million customers in Kenya) and disbursing over $5 billion ($2 billion in Kenya).

In Kenya, 44% of customers accessed digital credit for the first time through Tala (Tala 2023 Impact Report by 60 Decibels). 70% of credit today is utilized for business purposes.

The main challenges have evolved around increased competition in a previously unregulated market which thoroughly depleted consumer trust in the sector due to increased cases of unfair collections practices and debt shaming.

We have since, however made good strides through the founding of DFSAK (formerly DLAK) which focused on self-regulation of the sector and setting up the operating standards for the sector. The DCP regulations under the Central Bank have further streamlined the industry with 58 lenders currently licensed and over 500 applications sitting with the central bank.

2. Since your inception in 2014, has the digital lending industry evolved? What would you say was Tala’s role in that?

Tala kickstarted the first phase of the digital lending industry which was focused on opening up access to credit for millions of customers who had been left out.

Today, there are over 300+ digital lenders and over 500 digital lending licenses pending. This massive growth is heavily attributable to the ingenuity that incumbents such as Tala kickstarted as well as enabling ecosystem factors such as the high adoption rates of mpesa and growth of the credit bureau sector in Kenya.

We believe that the industry is now moving to its second phase which will be shaped by use case lending and more customer centric innovation to offer a more personalized experience.

3. Ten years later, would you say that Tala’s products have been a corresponding factor in improving financial access and financial stability for the largely unbanked Kenyan population?

Having touched 3.5 million customers in Kenya, I would say Tala’s impact has been quite significant. In the 2023 Tala Impact Report by 60 Decibels, 76% of customer reported an improvement in the quality of life while 63% reported a reduction in financial stress due to access to credit.

In the same report, 58% of women reported that their influence in decision making within their households had increased, while 80% reported that their general confidence had increased and 67% reported that their financial independence had increased. More importantly, we have found women to be better repayers over time.

4. On to the business itself, are you profitable now in year 10? And with the challenging macro environment, what is your loan book size and what are the loan repayment rates?

We are currently profitable and have repayment rates averaging 90%.

5. In the era of AI, how will these new technologies change the way Tala and the financial sector in general operate and solve customers’ problems?

Tala has been a market pioneer in the use of machine learning and AI to underwrite. Today we have multiple models that ensure that we can offer real time decisioning in under 3 seconds.

Our strategy has always been oriented around how AI, technology, and data can provide access to those shut out of the legacy financial system.

The challenge and opportunity now is how we maximize what these large language models like ChatGPT & Gemini can do. In addition, it is also about how every strategy in Tala can be turbo-charged by AI especially around how we engage customers, expand financial education and build our strategies.

6. Can you share an overview of Tala’s strategic priorities for the next ten years? Are you looking to acquire any of the small banks in Kenya in your next phase of growth?

Looking into the future,  Tala’s focus for the next decade will be three pronged, that is, more customer-centric innovation coupled with ecosystem partnerships, expansion into other East African markets, namely Tanzania and Uganda  and rest of the continent and focus on policy/regulation to further drive financial inclusion.

Moving into the next decade, we believe that we will be moving to a second phase of the industry, thinking beyond access and into the ability of the industry and Tala to offer more customer-centric (personalized) solutions.

With our in depth understanding of the mass market customer and our data science capabilities, we are increasing our focus on partnerships and being an ecosystem enabler(B2B partnerships) in opening up access to credit.

We are focused on expanding our product and credit access across Africa, pulling on the same thesis of our founding – how do we unleash the economic power of the global majority.

We are committed to continuing to work with regulators and governments to shape policy around responsible lending and financial inclusion, not just in Kenya but across Africa. We started in KE with the founding of DFSAK to create a framework for industry operation and consumer safety in KE five years ago.

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