Financial Crime World

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Kenya’s Fintech Industry Faces Challenges

Kenya’s Fintech industry faces significant hurdles, including technological, regulatory, customer, and market system concerns. Despite efforts to foster growth through regulatory sandboxes, these initiatives have yet to make a substantial impact on adoption, particularly for fintech companies focused on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT).

Research Objectives

The study aims to empirically examine and analyze the adoption of risk and compliance-based fintech in Kenyan commercial banks, exploring the factors that influence this process.

Methodology

The research builds on diffusion of innovation theory and the technology-organization-environment framework to identify the key parameters impacting the adoption of risk and compliance-based fintech. A questionnaire was used to collect data from 37 Kenyan commercial banks, which were then analyzed using factorial analysis and logistic regression.

Findings

The findings indicate that:

  • Compatibility with financial technology is a significant factor in the adoption of risk and compliance-based fintech.
  • Perceived barriers, such as cost, complexity, and security concerns, also impact adoption.
  • Government regulations play a crucial role in shaping the adoption of risk and compliance-based fintech.

Implications

The study provides valuable insights into the factors influencing risk and compliance-related fintech adoption features for commercial banks, policymakers, and regulators. For example:

  • Fintech companies must ensure their solutions are compatible with existing systems and processes.
  • Government regulations play a crucial role in shaping adoption.
  • Fintech companies must prioritize AML/CFT compliance in their development processes.

Conclusion

Ultimately, the research highlights the importance of collaboration between fintech companies, commercial banks, policymakers, and regulators in promoting AML/CFT compliance and driving growth in Kenya’s Fintech industry.