TALA: Expanding Access to Finance for Prosperity
By Erick Otieno
When he talks about his previous years at Citigroup, his first employer and Umati Capital, a fintech startup he co-founded, he tells colorful stories, with droll, self-effacing anecdotes.
And on whether he regrets folding up a company he co-founded more than five years ago, he simply says, “not at all.”
Standing just over six feet tall, with piercing heavy-lidded eyes and a distinguishable broad smile, Ivan Mbowa, doesn’t mince words and is extremely excited about the future prospect of his new employer albeit in a familiar role at the Kenya’s largest non-bank fintech, TALA.
On the surface, when I initiate my blunt interface with him, he appears to have lived a charmed life. He enjoyed an urban and prosperous childhood.
Born in Kenya to Ugandan entrepreneurial parents, he showed early interest in making a career in finance, and at 16 years he already knew he wanted an office job where he could work indoors and behind the scenes, wear nice clothing and keep steady hours.
“We moved here in the 70s when Uganda was going through some political tumult. I grew up from a house where commerce was discussed, import-export and I think this had a huge influence on me, my interest in going into finance was solidified at a young age when I met an investment banker John Paul Munge who introduced me into the idea,” he narrates.
And following in his parent’s footsteps, the soft-spoken Mbowa was sent to the United States to ignite his career in Boston at Tufts University where he spent 4 years. There, he studied economics and international relations (IR) and upon graduating he got his first stint with Citibank where he went on to work for a whopping 14 years in various positions as an investment banker, currency trader, stock broker and financial trader.
It is during his later years at Citi that Ivan says, he met his would-be business partner (from Rupu) with whom together they formed Umati capital, just after establishing a new financial arm at Kenya’s Citi bank.
“I think it is this experience which was really tough that opened my eyes to new possibilities into digital financial services. And I think all these prepared me for my new role at TALA,” he says, adding that the idea behind Umati capital, was to provide credit to Kenyan farmers within the agronomic supply chains to create a scalable digital credit solution to the thousands of agriculturalists, something akin to what he’s now tasked to navigate at TALA – which is competing with more than 50 app-based lenders in Kenya offering household liquidity and small-business loans for entrepreneurs.
On his new role
Ivan is now TALA’s business lead for Kenya having been appointed barely three months ago to help guide the online lender to new heights, five years since its inception.
“I think I have been attracted to the mission TALA has in trying to expand access to finance and it’s a personal motivation based on what I have been doing before joining the company. And actually I had met TALA’s founder Ms. Shivani at a Fintech conference about five years ago, I was aware of what they were doing and I am now excited to join and lead Tala’s Kenya team to help shape the next stage of Tala’s business,” he opens up during a cordial chat at the company’s head office in Parklands, Nairobi.
Lending to unsecured customers as a business concept, first appeared to him as a perilous undertaking, describing it as being “scary” and “radical.”
“When she was taking me through the concept, I thought it was very bold, I felt it was radical, scary almost this idea that they were going to lend to pretty unsecured population just using data taken from android smartphones- that time it was unheard of,” says Mr. Mbowa who previously worked with Citigroup, in over seven African countries in different roles before calling it a day to co-found a fintech startup, Umati Capital in 2013, which went on to pioneer mobile-money supply chain finance in Kenya.
“Because of this, I was aware of the existing space, unfortunately there were a number of factors especially with our investors that limited how far we (Umati Capital) could go, and so now for me joining TALA is like I’m climbing the same wall with a different flag.”
His future plans for TALA
When the conversation shifts to the company’s strategies for the future, he becomes more guarded, carefully crafting his responses.
“At TALA we have a mission which focusses solely on three areas, driving financial access, increased choice for our consumers and for them to have control, which is going beyond our initial product,” he says, but adding that in the short to medium and long-term plan for TALA, the company would go beyond just offering credit and financial services to its customers.
He further says the company would also focus on viable and practical partnerships and other products to boost the company’s revenues as well as customer base – which stood at 2.5million, the number of customers TALA has served in the last five years.
With existing opportunities in Sharia’h complaint products, Mr. Mbowa is not ruling out a possibility of the company coming up with such products to target the Islam community yearning for ‘financial affection’ and presently locked out from conventional financial instruments and products in the market.
Sharia’h compliant financing is banking or financing activity that complies with sharia (Islamic law) and its practical application through the development of Islamic economics. Some of the modes of Islamic banking/finance include Mudarabah (profit-sharing and loss-bearing), Wadiah (safekeeping), Musharaka (joint venture), Murabahah (cost-plus), and Ijara (leasing).
While he remains coy about the company’s targets, Ivan believes TALA has the potential to grow far and beyond owing to the mission and ethos the company has put in place as well as political will from stakeholders.
“We are constantly engaging the likes of Treasury, Parliament and Central Bank to ensure that we have a tailor-made solutions for players like ourselves. We are in favor of regulations, we just want to have an honest conversation around this,” he says.
Members under the Digital Lenders Association of Kenya (DLAK) had called for sound and balanced regulations to promote industry best practice and drive a coordinated approach in addressing the emerging industry’s pressing issues, as well as help address some of the emerging challenges affecting the now popular industry.
The association was recently incorporated and brings together leading digital-first lenders and other key stakeholders to represent and promote the common interests of digital lenders, consumers, and the digital lending industry.
Available industry data shows that there is a significant amount of people in Kenya living without a documented financial history. Without that documentation, it has been nearly impossible for banks and other traditional financial institutions to understand and provide credit to these individuals.
Despite the growing number users of such financial products, challenges such as lack of consumer protection, financial literacy as well as the absence of regulations for non-deposit taking institutions continue to threaten the sector’s growth.
The first DLAK research report is expected to be out soon, whose contents will lay bare the sector’s growth over the years and future outlook as it continues to witness tremendous growth.
It is against this backdrop that Tala’s Ivan believes that the timing for sound regulations is now imminent.
“We are in constant conversation with the regulatory bodies.”
In five years he wants to see the company still relevant and different in its products’ offering, “I want us to continually innovate if we are able to pioneer things,” he concludes.