Kenya’s HFC bank takes up Infobip’s WhatsApp banking solution to extract maximum value from its digital platform
Infobip deployed a WhatsApp Business API and SMS banking solution at Kenya’s HF Group Plc’s banking subsidiary HFC.
Headquartered in Nairobi, Kenya, the 54-year-old HF Group is a mortgage finance provider in the East African country. Currently, HF Group is the only licensed mortgage company regulated by the Central Bank of Kenya. In 2015, the organisation launched its full-service banking offering under its subsidiary HFC Limited. While mortgage remains the group’s main product, it now also offers full commercial banking solutions including Personal Banking, SME banking, a treasury (for foreign exchange and money market solutions), as well as digital banking. HFC targets predominantly emerging affluent, high net worth, middle and upper-middle-income customers and services a client base of approximately 300,000.
Kenya’s banking sector is highly concentrated, with a small number of the country’s 40-plus licensed lenders holding half of the market’s deposits and loans, according to a report by Asoko Insight. Two-thirds of banks are locally owned, while the remaining third is made up of subsidiaries of foreign institutions from elsewhere on the continent, Europe and Asia, and the US. While the country’s financial sector is well developed, it is considered overbanked. Mobile financial services are the preferred method to access financial services in Kenya and are used by close to 80% of the adult population. The Banking Industry in Kenya 2019 report notes that there are more than 20 digital credit services in the country, and new services continue to come on stream.
With the launch of its digital banking platform dubbed HF Whizz, HFC set its target segment as the youth (aged 18-24) and micro-entrepreneurs. Most customers in this segment were mainly interested in short-term credit, and other small-value transactions. The company acknowledged that – as a banking institution – it needed to find a way to offer a wider range of services to its customers through its digital banking platform. While its customer engagement was conducted mainly via email, SMS, USSD and WhatsApp channels, it sought to obtain a better understanding of the customers that utilised its digital banking platform and to find ways of increasing the number of transactions per customer, as well as the range of products and service they were typically using.
The 18-24-year-old segment, primarily made up of college and university students, was mainly seeking instant loans but lacked financial education about repaying these loans on time, or at all, posing a significant hurdle for HFC. The bank determined that it needed a commonly used platform to share information with this customer demographic. At the same time, it also realised that it could leverage its digital banking platform to tap into its existing customer base to upsell its products and services.
In 2018, having defined its digital strategy and established its requirements through a consultative effort involving cross functional internal teams and an external consultant, HFC identified the type of solutions provider it would ideally need. An ideal provider would have to be agile to implement and customise solutions in a short space of time, it needed to offer flexibility in terms of innovation and pricing and have simple Application Programming Interfaces (APIs) that HFC could connect to. Most importantly, the bank sought a partner that could provide 24-hour support and a designated team to implement the project. The bank wanted a WhatsApp Business API banking solution, coupled with a two-way SMS channel to complement its USSD and App platforms. After issuing requests for proposals, Infobip was chosen as the successful bidder, not only based on pricing, but also on its willingness to fully understand HFC’s vision, and its ability to provide an agile and innovative technology solution that met all the bank’s requirements.
Infobip’s solution has led to a tremendous improvement in HFC’s net promoter score (NPS), which measures customer experience and predicts business growth. At the beginning of the year, digital banking NPS stood below 10 but has shot up to above 50 since the implementation of the Infobip solution. HFC also did an active push to move USSD users onto the WhatsApp platform and – of the 7 000 customers it communicated with – has thus far seen a 52% conversion rate. Its ultimate goal is 70%. The banking solution has led to an increase in revenue as some of the transactions are revenue-generating.
“It was a pleasure working with HFC as they are an innovative and forward-looking bank. The synergy between our teams was remarkable – they knew exactly what they wanted and that was crucial to enabling us to deliver to their specifications.” - Marko Reis, Regional Manager for East Africa at Infobip.
“Infobip’s solution has been a huge game-changer that has enabled us to have more customer interactions. The customer journey has changed completely and we are happy that Infobip understood our vision and delivered on our requirements.” - Rose Muturi, Chief Digital Officer at HF Group.