TransUnion research found that 2.3% of transaction attempts^[1] involving consumers in Kenya in 2025 were suspected of digital fraud, slightly below the global average of 3.8% but the second highest among the African countries analysed after South Africa. Despite the year-over-year (YoY) decline in suspected digital fraud from Kenya and globally, fraudsters continue to adapt, turning to high-trust, scam-based tactics that can bypass traditional safeguards.

While overall suspected digital fraud rates remain comparatively low, the consumer impact remains meaningful. Among Kenyan consumers surveyed^[2] by TransUnion who reported losing money to digital fraud in the past year (defined in the survey as email, online, phone call and text message scams), the median reported loss was KES 108,132. This is the highest among African countries assessed.

These are among the findings in the TransUnion H1 2026 Update: Top Fraud Trends report, which blends insights from a TransUnion consumer survey and its global intelligence network to track how fraud patterns are shifting across markets and digital channels.

“Kenya is emerging as one of Africa’s fastest-growing digital economies and global experience shows that the markets that scale fastest are also the first to encounter sophisticated, identity-driven fraud at scale,” said Amritha Reddy, senior director of fraud product management at TransUnion Africa. “As mobile device usage, real-time payments and high frequency digital transactions continue to grow, fraudsters actively search for new opportunities.”

Third-Party Seller Scams Emerge as the Top Driver of Consumer-Reported Fraud Losses in Kenya

Kenyan consumers are increasingly facing coordinated, identity-driven and cross-channel fraud, similar to patterns seen in mature digital economies, with fraud moving deeper into everyday digital interactions.

Among Kenyans who reported losing money to digital fraud over the past year, nearly four in ten (39%) said third-party seller scams on legitimate ecommerce sites were responsible for the loss. This indicates that losses are not occurring in obviously risky environments, but within credible, familiar and trusted platforms where fraudsters successfully embed themselves.

As noted above, Kenyan consumers reported the highest median digital fraud loss among the African countries analysed, indicating that fraud in the region is no longer marginal. Rather, it is material and increasingly widespread. Unlike fringe scam activity, losses are now often linked to everyday digital interactions, where speed, familiarity and routine reduce opportunities to pause or verify.

“Fraud tends to do the most damage in places where people already rely heavily on digital services, not just where those services are new,” Reddy said. “In Kenya, mitigating against fraud risks is now part of everyday digital activity.”

Chart 1: Most Prominent Cause of Consumer-Reported Fraud Loss in Kenya – 2025

Source: TransUnion consumer survey

Digital Fraud Risk is Highest at Account Creation in Kenya

Even when overall suspected fraud rates appear lower than 2024, risk can remain elevated at specific points in the digital consumer lifecycle, particularly where criminals attempt to create or manipulate identities. In 2025, the highest suspected digital fraud rate in the consumer lifecycle in Kenya occurred at account creation (4.5%), followed by account login (2.2%) and during financial transactions (0.9%).

“While onboarding controls remain important, fraud pressure in Kenya is increasingly visible at access points,” Reddy explained. “In mobile first markets, this shift happens faster and with greater financial impact. The next fraud battle won’t be fought at onboarding – it will be at re-entry.”

Kenyans Accept Some Friction If They’re Protected from Fraud

Findings from the TransUnion survey also show that Kenyan consumers ranked the most important features when choosing whom to transact with online as confidence that their personal data is secure (88% rated this as very important), an easy payment process (87%), and ease of login or authentication (79%).

“The fact that security is the top reported feature shows that consumers are willing to accept friction when completing digital transactions, provided it’s clearly linked to protection,” Reddy said. “As a result, security in Kenya is evolving beyond compliance and emerging as a key driver of brand trust and differentiation.”

Online Gaming-Related Transactions Show the Highest Suspected Digital Fraud Risk Among Sectors Analysed

Across Africa, suspected digital fraud risk varies by industry, reflecting local user behaviours and where criminals see opportunity. For attempted transactions involving consumers in Kenya, online gaming-related transactions (online sports betting, poker, etc.) recorded the highest suspected digital fraud attempt rate in 2025, at 15.6%.

As more services converge around mobile identity, real‑time connectivity and platform‑based interactions, fraud increasingly appears wherever users are most active; not only where money changes hands.

“Online gaming platforms often act as early testing grounds for new fraud tactics,” said Reddy. “In Kenya’s connected digital economy, fraud doesn’t stay in silos. It moves wherever trust and engagement already exist.”

Chart 2: Suspected Digital Fraud Attempts from Kenya, by Sector

Source: TransUnion global intelligence network

What Consumers and Businesses Can Do

As fraud tactics evolve, consumers can help reduce risk by safeguarding personal information, remaining cautious of unsolicited calls and messages and regularly reviewing their credit information for suspicious activity.

For organisations, the data reinforces that fraud strategies must extend beyond compliance to actively protect trust across the entire consumer lifecycle-particularly at onboarding and account creation, where criminals attempt to exploit established relationships through scams and impersonation.

Kenya has transitioned from reactive fraud controls to proactive intervention, particularly across mobile money, digital identity and cybercrime. The policy direction is clear: trust, accountability and system-wide collaboration are emerging as foundational pillars of the country’s digital economy defence.

“Kenya offers a preview of what lies ahead for mobile-first economies globally,” Reddy concluded. “Protecting identity and trust is no longer optional as unmanaged fraud increasingly places digital success at risk.”

TransUnion’s insights are based on a global survey of 12,730 consumers in 18 countries and regions, conducted between Nov. 20–Dec. 9, 2025, alongside intelligence from its suite of TransUnion fraud prevention solutions. To learn more about how TransUnion fraud prevention solutions can help businesses avoid fraud and prevent fraud losses, click here.

Specific country and regional data in the report includes Kenya, Botswana, Brazil, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Hong Kong, India, Mexico, Namibia, Nicaragua, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States and Zambia. Download the TransUnion H1 2026 Update to the Top Fraud Trends Report for more information and insights about the global fraud trends.

^[1] Suspected digital fraud attempts reflects those which TransUnion clients determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon client investigation, or 4) a corporate policy violation upon client investigation. The country and regional analyses examined transactions in which the consumer or suspected fraudster was located in a select country or region when conducting a transaction. Global statistics represent every country worldwide and not just the select countries and regions.

^[2] TransUnion surveyed 495 consumers in Kenya from Nov. 20 to Dec. 5, 2025. 

According to the new TransUnion® (NYSE: TRU) H2 2025 Update to the Top Fraud Trends Report, Kenya recorded the highest rate of suspected digital fraud^[1] in the consumer life cycle at account creation. In the first half of 2025, 4.4% of account creation attempts by consumers in the country were suspected of digital fraud. This is in alignment with account creation fraud being the highest in the consumer lifecycle globally where 8.3% of those types of transaction attempts were suspected of digital fraud in H1 2025.

The report, which draws on proprietary data from TransUnion’s global intelligence network from billions of transactions from over 40,000 websites and apps and a consumer survey across 18 countries, reveals that fraud is growing in certain areas.

“In Kenya, the complexity of digital fraud attacks are accelerating as fraudsters leverage AI, impersonation tactics and social engineering to exploit gaps in verification and awareness,” said Amritha Reddy, senior director of fraud product management TransUnion Africa. “Our global business survey found financial losses from fraud are growing, indicating that although some defence mechanisms are working fraudsters are shifting tactics, scaling up or moving into less defended sectors.”  

According to analysis of TransUnion’s customers in its global intelligence network, digital account takeover volume worldwide grew 21% year-over-year (YoY) from H1 2024 to H1 2025, signalling a rapid escalation. The volume of digital account takeovers surged 141% from H1 2021 to H1 2025, underscoring a persistent rise of this fraud type over time and reflecting the increasing sophistication of fraudsters who exploit stolen credentials and bypass authentication systems.

"As account takeover fraud surges, businesses can no longer afford solely reactive defences,” said Reddy. “The growing sophistication of fraudsters demands a proactive investment in layered security and identity intelligence. In today’s threat landscape, protecting customer accounts is not just a priority, it’s a business imperative."

Highest Rate of Suspected Digital Fraud in Video Gaming

Among industries analysed globally, the video gaming sector recorded the highest percentage of suspected digital fraud attempts in the first half of 2025, reaching 13.5%. This represents a significant 28% rate increase compared to the same period in 2024, underscoring the growing vulnerability of this sector to fraudulent activity.

For transactions where the consumer was in Kenya, the rate of suspected digital fraud attempts in H1 2025 was the highest in the gaming industry, which includes online sports betting and poker, at 10.4%.

Chart 2: Suspected Digital Fraud Attempts in Kenya, by Sector

^{Source: TransUnion global intelligence network}

“As the risk from consumer scams threatens identity integrity, organisations should rely on a mixture of data, risk signals, technology and tools to prevent fraud,” said Reddy. “The report highlights that business leaders rank^[2] identity verification, device reputation and behavioural biometrics as the leading three fraud prevention technologies.”

“Businesses and financial institutions should also invest in sustained education and awareness campaigns to mitigate against schemes like account takeovers. Preventing fraud must by necessity be a multi-pronged strategy, if businesses and consumers are to stay ahead of fraudsters whose strategies continue to evolve too,” she said. “By harnessing advanced technologies, fostering cross-sector collaboration and prioritising consumer trust, Kenya can chart a path toward a secure and inclusive digital future.”

Consumer-Reported Exposure to Fraud High Amid Gaps in Awareness and Prevention

Globally, consumers continue to face a wide range of scams, with tactics often tailored to regional behaviours and vulnerabilities. TransUnion’s survey found that 48% of consumers surveyed globally reported being targeted by email, online, phone call or text messaging fraud from February to May 2025, with 81% of Kenyans saying the same thing. Globally, 52% were unaware that they were targeted, as were 19% of Kenyans, indicating potential fraud under-recognition and a gap in fraud awareness.

Consumers in five of the six African countries surveyed reported money or gift card scams as the most experienced fraud type. In Kenya, vishing was the most common fraud type – reported by 46% of those who said they were targeted with fraud from February to May 2025. Among those Kenyans who said they were targeted, the next most frequently reported scams were money or gift card scams (45%), phishing (41%) and smishing (39%). Vishing, phishing and smishing are designed to deceive individuals into giving up their valuable personal or financial information.

Kenya Had the Second Highest Percentage of Respondents in Africa Indicating They Fell Victim to Fraud from February to May 2025

 ^{Source: TransUnion consumer survey}

“Despite high exposure, Kenya is advancing in fraud prevention as financial institutions are adopting AI-powered fraud detection, biometric verification and consumer education initiatives. However, more has to be done to combat fraud attempts in video gaming, where protections should include identity, device and behavioural analytics,” said Reddy. “A safer digital Kenya is achievable when trust becomes a shared responsibility. As scammers continue to evolve their tactics to enrich themselves, it’s more important than ever for consumers to regularly review their credit reports to ensure all listed information is accurate.”

TransUnion came to its conclusions about digital fraud based on intelligence from its array of TransUnion fraud prevention solutions. To learn more about how TransUnion fraud prevention solutions can help businesses avoid fraud and prevent fraud losses, click here.

Specific country and regional data in the report includes Kenya, Botswana, Brazil, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Hong Kong, India, Mexico, Namibia, Nicaragua, the Philippines, Puerto Rico, Rwanda, Spain, South Africa, the United Kingdom, the United States and Zambia. Download the TransUnion H2 2025 Update to the Top Fraud Trends Report for more information and insights about the global fraud trends.

^{[1] Suspected digital fraud attempts reflect those which TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation.}

^{[2] As found by TransUnion’s online business survey conducted from 29 May to 6 June 2025 in partnership with third-party research provider, Dynata. Findings were included in TransUnion’s H2 2025 Update to the Top Fraud Trends Report}

Information and insights company TransUnion Kenya has published its Q2 2025 Consumer Pulse Study* which shows that the finances of 59% of Kenyans were going as planned or better, with 84% expecting their income to increase in the next year. This is likely fuelling the optimism of 84% of Kenyans who say that they’re optimistic about their financial future.

Kenyans are taking charge of their financial futures, with 34% indicating that someone in their household started a new business, nearly one in five (18%) started a new job, and one fifth (20%) have had increases in their incomes in the past month. This confidence – and increase in income – has seen 40% of consumers paying down their debt more quickly, while nearly half (46%) have been able to increase their emergency savings – a five-percentage point increase from the same period last year.

While Kenyans express optimism about the future, their top financial concerns reflect ongoing macroeconomic pressures. Inflation leads the way, with 76% identifying it among their top three worries, followed closely by job security (60%) and housing affordability (55%). Together, these paint a picture of a population navigating rising costs, employment uncertainty, and challenges in securing stable living conditions. With these concerns in mind, 61% cut back on discretionary spending such as dining out, travel or entertainment in the preceding three months.

This is likely to be a trend that will continue, as more than half (55%) expect their discretionary spend to decrease in the coming three months, and 42% expected their spend on in-store or online retail to decrease too. Nearly half (49%) expected to spend less on large purchases in the next quarter.

In line with these constraints, 62% of Kenyans said that they’re expecting to be unable to pay at least one of their current loans or bills in full in the coming quarter – although this is slightly less than those who said the same thing a year ago (64%). Determined to meet their obligations, 48% said that they would take on temporary or gig work to service their debt, 34% said that they would use money from their savings, and 30% said that they would borrow money from a friend or family member.

“Kenya continues on its growth path, driven by resilient and value-driven consumers who are navigating a moderate inflation environment that’s inspiring cautious optimism in the country’s recovering economy,” said Morris Maina, CEO of TransUnion Kenya. “By delaying spend on big ticket items and finding ways to manage their debt effectively, consumers are signalling mature credit behaviour, which in turn is likely to be a driver for economic growth into the future.”

One of the most effective ways for consumers to manage their credit commitments effectively is to monitor their credit score and record, and nearly two thirds (65%) of respondents to the survey said that they monitor their credit at least monthly. More than half (55%) said that they do this to improve their credit scores, half (50%) said that they do so to monitor accuracy, and nearly one third (32%) said that they do so to protect themselves against fraud.

Kenyans focus on fraud detection and prevention

Data breaches (56%), stolen identity (53%) and credit card fraud (46%) were the cyber threats that most concerned surveyed Kenyan consumers. More than half of Kenyans (56%) were worried about becoming a victim of fake social media profiles (56%), with the next most pressing worries being that personal information would be exposed in data breaches (52%), that they would fall victim to viruses or malware (44%) or email phishing (44%).

In Q2 2025, 71% of respondents reported being targeted by fraud attempts through online platforms, emails, phone calls, or text messages, but they did not fall victim. An additional 10% said they were both targeted and scammed.

Medium-income consumers (KSH 300,000 to KSH 1.4 million per annum) were particularly affected, with 77% reporting fraud attempts — nearly ten percentage points higher than other income groups. The most common types of scams included vishing (fraudulent phone calls meant to trick you into revealing data ) at 46%, money/gift card scams (45%), phishing (fraudulent emails, websites, social posts, QR codes, etc. meant to steal data) at 40%, smishing (fraudulent text messages meant to trick you into revealing data) at 39% and third-party seller scams on legitimate retail websites (36%).

“Financial services institutions can help their consumers protect their credit profiles by adding solutions like identity proofing and risk-based authentication to their onboarding processes, without compromising consumer experiences during the application process,” Maina said. “With fraudsters evolving their strategies all the time, preventing and detecting fraud must be a holistic approach that empowers financial services providers, businesses and consumers to protect themselves.”

#ends

^{*The survey of 433 Kenyan adults aged 18 or older was conducted 5-15 May 2025 in partnership with third-party research provider, Dynata.}

Eighty-two percent of Kenyans TransUnion surveyed from 21 November to 9 December 2024 indicated that they had been targeted by email, online, phone call or text messaging fraud in the last three months with 11% saying that they had become victims. Among those who said they were targeted, the most common reported schemes were smishing where fraudulent text messages try to trick users into sharing personal data (39%), phishing where fraudulent emails, websites, social posts or QR codes are meant to steal personal data (36%), and vishing, where fraudulent phone callers try to induce the user into sharing data (33%).

In a separate question in the same survey, nearly half (45%) said that they lost money to email, online, phone call or text messaging fraud in the last year. More than one third (34%) of those who said they lost money reported it happening via third-party seller scams on legitimate online retail websites. This was followed by 26% of Kenyans losing money via unemployment fraud and 25% losing money from account takeovers.

These and other findings came from research used for building the newly released TransUnion (NYSE: TRU) H1 2025 Update to the State of Omnichannel Fraud Report, which shows how Kenyan consumers continue to be targeted by fraudsters through a wide range of channels.

“Kenya has a 133.7% mobile phone penetration rate, with people using mobile phones to conduct their everyday business, connect with friends, or keep in touch with family, so it’s easy to understand why digital fraud would be such a common tactic among fraudsters targeting this region,” said Amritha Reddy, senior director of fraud solutions at TransUnion Africa. "While cybercriminals will attack at any time using any channel, they appear to focus on channels most popular in the regions they are targeting.”

Nineteen percent of Kenyan respondents indicated that they were not aware of being targeted by email, online, phone call or text messaging fraud at all, which raises questions as to whether these respondents were in fact targeted, yet simply unaware of the threat.

Based on the TransUnion study, Kenya tied Namibia with having the second highest percentage of respondents who said they fell victim to email, online, phone call or text messaging fraud in the second half of 2024 among countries surveyed in Africa. In contrast, Zambia had the lowest percentage of consumers who said they fell victim to fraud in the countries surveyed across the continent.

Table 1: Fraud Types Most Frequently Used to Target Consumers in Sub-Saharan Africa in the Last Three Months

   Source: TransUnion Consumer Pulse Survey of 500 people in Kenya in December 2024

Communities and Video Gaming Among Top Industries Targeted by Suspected Digital Fraud

Globally, TransUnion determined communities (online forums and dating sites) experienced the highest rate of suspected digital fraud^[1] attempts in 2024. Nearly 12% of all attempted transactions within communities were suspected to be digital fraud last year. This is closely followed by video gaming (11%), with gaming (including online betting, poker, etc.) at 8% and retail (8%) rounding out the top four.

The logistics industry, which has seen growth in shipping fraud (often perpetrated by organized crime rings), saw the greatest suspected digital fraud volume growth globally in 2024, up more than 100% over 2023. The fraud rate remains at a relatively modest 3%. Gaming also saw a significant year-over-year (YoY) volume change, up 20%. Telecommunications (-79%), insurance (-29%) and video gaming (-23%) saw the greatest decreases in suspected digital fraud volume YoY.

“Digital fraud on community platforms is by no means a new phenomenon. In 2024, it appears that fraudsters targeted these areas with a renewed vigour,” said Reddy. “Cybercriminals take advantage of the trust inherent on community-based platforms, and target members with a wide range of scammer solicitations, the most reported type of digital fraud in communities.”

For attempted transactions where the consumer or fraudster was located in Kenya, gaming experienced the highest suspected attempted digital fraud rate in 2024 at 12.9% with a 33.8% increase in the volume of suspected digital fraud from 2023.

“It is encouraging to see that attempts at digital fraud have decreased across all but two of the surveyed industries in Kenya,” Reddy says. “Organisations that draw on identity, device and behavioural insights to help them interact with legitimate consumers while mitigating fraud risk are more likely to protect themselves and their customers from the scourge of digital fraud.”

Table 2: Highest Digital Fraud Rates Across Leading Industries in Kenya

Source: TransUnion TruValidate™

Fraud Comes with a Heavy Cost to Consumers

Consumers faced significant losses due to fraud. Among consumers TransUnion surveyed in 18 countries and regions in November and December 2024, 29% said they lost money due to email, online, phone call or text messaging fraud in the last year. The survey determined that the median amount those consumers said they lost due to fraud in the past year was Ksh226,132. For those who said they lost money due to fraud in Kenya, the median stated amount lost was Ksh116,108^[2].

TransUnion came to its conclusions about digital fraud based on intelligence from TransUnion TruValidate.

Specific country and regional data in the report includes Kenya, Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Guatemala, Hong Kong, India, Mexico, Namibia the Philippines, Puerto Rico, Rwanda, Spain, South Africa, the United Kingdom, the United States and Zambia. Download the TransUnion H1 2025 Update to the State of Omnichannel Fraud Report for more information and insights about the global fraud trends.

^{[1] The rate or percentage of suspected digital fraud attempts reflects those which TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation — compared to all transactions assessed. The country and regional analyses examined transactions in which the consumer or suspected fraudster was located in a select country or region when conducting a transaction. Global statistics represents every country worldwide and not just the select countries and regions.}

^{[2] Based on the exchange rate on 6 Jan. 2025}

TransUnion Kenya, a global information and insights company, and global analytics software leader FICO are leading the charge in transforming the country’s financial landscape with new groundbreaking risk solutions that are designed to broaden access to credit and empower financial institutions. By leveraging enriched data and analytics, lenders can now make more informed decisions, which foster greater economic empowerment and build a more resilient financial ecosystem.

The two new solutions at the heart of this transformation are TransUnion’s CreditVision® Variables solution and the FICO^® Score. Together, they address critical challenges in risk assessment and financial inclusion. CreditVision Variables provides an enhanced view of consumer financial behaviour, analysing over 145 data sources and up to 24 months of historical payment data. The new FICO Score is built for the Kenyan market using proprietary predictive analytics technology and over 4 million records from the TransUnion database.

Enhancing traditional credit risk strategies with the FICO Score and comprehensive data analysis can improve risk predictability and enable lenders to extend financial services to more consumers. In other global markets, lenders integrating CreditVision Variables into their credit risk strategies have experienced a significant boost in risk predictability by 20%-30%. This enhancement has led to a notable improvement in approval rates, ranging from 15%-20%.

CreditVision Variables can address essential business needs by:

• Cost-effectively identifying and engaging the right new customers
• Growing and optimising the profitability of existing customers
• Providing insights into customer motivations and behaviours

“The effects of these innovations are expected to be profound. Consumers, Small, Micro and Medium- sized Enterprises (SMMEs) and other businesses can benefit from greater access to credit and financial services, enabling them to improve their financial health and achieve their goals. Lenders will have access to better risk management and decision-making tools, leading to greater financial inclusion and economic empowerment, and driving more sustainable overall economic growth and stability,” said Morris Maina, CEO of TransUnion Kenya.

TransUnion has partnered with global analytics software pioneer FICO across Africa since 1997 and the two firms are now expanding their partnership to Kenya to introduce FICO’s advanced scoring models designed to meet the needs of the local market. This collaboration aims to improve credit-granting processes by equipping lenders with these advanced tools to manage portfolio risk and monitor credit activity.

The FICO Score is the latest evolution of credit scoring for the Kenyan market and has been designed to reflect the rapidly evolving lending ecosystem, where microlending, in particular, is more embedded than before. This single credit risk score provides lenders with a more granular and effective means of credit risk assessment, enabling a more accurate understanding of borrowers, and provides a significant boost in predictive power across all forms of lending. The predictive power of the new Kenya-specific FICO Score is significant across all forms of lending, with specific industries, such as microlending, performing particularly well. This is important in the Kenya context as 95% of scoreable consumers have at least one microlending tradeline.

Benefits of using the FICO Score include:

• A single credit score to help lenders make credit decisions across both traditional credit products and microlending, including mobile loans
• Rapid approval/decline decisions for new applicants, reducing friction at the acquisition stage
• Refined allocation of credit limits and loan amounts
• Consistent risk-based pricing and terms of business
•  Improved risk management, giving lenders the confidence to make more credit available while controlling losses
• Greater efficiency using a single score across both traditional and digital lending channels

The FICO Score is a numerical snapshot of a consumer’s credit risk, providing a measure of their likelihood of fulfilling credit obligations. Using data from TransUnion, the model generates a score ranging from 300 to 850, where the higher scores indicate lower credit risk. Each credit score comes with the top four reasons for its calculation, offering transparency and actionable insights into factors impacting the score. The score is calculated on request by the lender and uses the latest information in the TransUnion file.

“This level of transparency aids both lending officers and consumers,” said Mike Manaton, Vice President of Scores at FICO. “The FICO Score provides clear insights into the factors influencing a consumer’s score. Additionally, it enables lenders to assess applicants more accurately, tailor credit terms accordingly and enable credit access for more consumers.”

An example of the power of the FICO Score is the distribution of accounts across the score range. As shown below, the risk decreases sharply as the score rises, with consumers scoring in the highest-risk decile (300-442) representing about nine times the risk of consumers scoring in the lowest-risk decile (682-850).

According to TransUnion's Q2 2024 Consumer Pulse Study, financial inclusion in Kenya continues to improve. Its insights showed that 36% of consumers felt they had sufficient access to credit compared to 33% who felt the same a year ago. The increase in financial inclusion is noteworthy because well over half (60%) of consumers said they were considering applying for new or refinancing existing credit within the next 12 months.

"We welcome this global innovation in Kenya and are confident that the industry will adopt these solutions to drive the country’s Financial Inclusion agenda. Financial inclusion remains a key focus for the industry, as it is essential for fostering economic growth and empowering communities. By embracing these new technologies, we can ensure broader access to financial services, in turn supporting sustainable development and prosperity for all," said John Gachora, Chairman of the Kenya Bankers Association (KBA).

Discover more about CreditVision Variables here and the FICO Score here.

Supporting industry quotes:

“TransUnion Kenya's and FICO’s new credit risk solutions are a game-changer for the region. At CIS Kenya, we believe these innovative solutions will empower businesses to make more informed decisions and drive economic growth." Jared Getenga, Chief Executive Officer, Credit Information Sharing Association of Kenya - CIS Kenya

ENDS

"Leading TransUnion Africa across eight countries has taught us that true transformation happens when we invest in people first. Our commitment to solving problems that matter has delivered tangible positive impact. This year we launched a groundbreaking middle manager development programme with Duke Corporate Education for high-performing associates, we advanced financial inclusion initiatives reaching millions across Africa and achieved 55% women representation across our employee base. Additionally, we've strengthened mental health support systems for our teams. The impact on our culture, innovation, relevance, and results is tightly correlated with our investment in making our business a great work environment for our employees and prospective recruits," said Lee Naik, CEO of TransUnion Africa.

Championing Diversity and Inclusion

“TransUnion GCC Africa, a fully virtual employer, has grown to almost 1,000 employees in just under four years. The TEI certification acknowledges our commitment to excellence in every aspect of our operations. We have built a highly skilled and motivated team by continuing to invest significantly in our people through initiatives such as sponsored education and learnerships. To date, we’ve spent R12+ million on sponsored education and external training, and had 278 learners go through our learnership programme — 55% were female, 68% have either been absorbed into full time employment or are currently finishing the programme. This creates career growth opportunities while supporting our mission to deliver premium experiences for TransUnion’s clients and consumers in 30+ countries," said Shobana Maikoo, Head of the GCC Africa.

Benchmarking Excellence in HR Practices

The Top Employers Institute programme certifies organisations based on the participation and results of their HR Best Practices Survey. This survey covers six HR domains consisting of 20 topics including People Strategy, Work Environment, Talent Acquisition, Learning, Diversity, Equity & Inclusion, Wellbeing and more. TransUnion's consistent recognition by TEI reflects its commitment to excellence and continuous improvement in HR practices.

The programme has certified and recognised only 2,400 Top Employers in 125 countries/regions across five continents.

The analysis reviewed attempted ecommerce transactions from across the globe and found that 4.6% worldwide were suspected to be Digital Fraud over the same period. Based on proprietary insights from TransUnion’s global intelligence network, TransUnion found that the global suspected Digital Fraud rate was down from 6.0% during the same period in 2023.

The study determined that the average volume of suspected Digital Fraud attempts on any given day during that holiday period globally was 30.2% lower than the same period in 2023 and 5.9% lower than during the rest of the year (1 January 2024 to 27 November 2024).

The Percentage of Suspected Ecommerce Fraud during Black Friday season vs. Overall

Source: TransUnion TruValidate™

“Across Africa, we have observed that Black Friday shopping has extended beyond the original five-day period, with retailers promoting sales throughout the entire month of November. We anticipate that the general lengthening of the holiday shopping season were factors in the decline in suspected Digital Fraud during the time under analysis compared to the rest of the year for most Africa countries,” said Amritha Reddy, senior director for solutions at TransUnion Africa. “For online retailers, this speaks to the need to maintain diligence year-round. For the remainder of this holiday shopping season, and beyond, online retailers must continue to implement tools that maintain a friction-right experience, wherein both business and consumer is protected without major disruption.”

The greatest fraud disruptions globally over the analysed period occurred on Thursday, 28 November with 5.3% of all attempted digital retail transactions on that day suspected to be Digital Fraud. The analysis also revealed the retail suspected Digital Fraud rate for each day in the analysed shopping period for attempted transactions where the consumer was in each of the six African countries studied, and highlighted the day on which the most suspected Digital Fraud took place.

The Suspected Ecommerce Fraud Rate Varies for Each Day of the 2024 Holiday Shopping Weekend

Source: TransUnion TruValidate

As part of this analysis, TransUnion also determined the top signals indicating risk of fraudulent ecommerce transactions during the holiday shopping season globally. This year, unusually high transaction volume from a single device and devices being newly associated with an account were among the leading indicators for potential fraud attempts.

“This international shopping period is always hugely impactful to retailers’ bottom lines, and our recent Consumer Pulse Study that consumers may be particularly eager to buy during this holiday shopping season,” said Reddy. “It’s as important as ever for retailers to equip themselves with the tools they need to detect fraud early. These tools can help minimise fraudulent transactions while at the same time protecting legitimate transactions. Retailers should seek to implement holistic fraud solutions that can verify customer identity and authenticity as early as possible during a transaction.” 

Consumers and businesses can take steps to prevent fraudulent activity:

For consumers:

1. Verify website security: Ensure that the websites you shop from use secure protocols (look for "https" in the URL).
2. Be sceptical of unrealistic deals: Bad actors often lure shoppers with "too good to be true" discounts.
3. Use secure payment methods: Utilise verifiable, trusted, and secure payment methods.
4. Protect personal information: Share only necessary information during transactions to avoid identity theft.
5. Monitor financial statements: Regularly review bank and credit card statements, store cards, etc., for unauthorised activity.
6. Beware of phishing scams: Avoid clicking links or downloading attachments from unknown emails or texts.
7. Strengthen account security: Use strong, unique passwords and enable multi-factor authentication on critical accounts.

For businesses:

1. Train employees: Educate employees on spotting fraud threats.
2. Communicate with consumers: Send warnings on fraud tactics and how to verify legitimate vs. illegitimate transactions.
3. Leverage real-time fraud verification tools: Monitor transactions closely for anomalies, especially during peak shopping periods.
4. Establish clear protocols: Set clear protocols for reporting and responding to fraudulent attempts.

These preventive measures are crucial, especially considering TransUnion's findings on Digital Fraud. TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate. The rate or percentage of suspected Digital Fraud attempts reflects those which TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation — compared to all transactions assessed. The country and regional analyses examined transactions in which the consumer or suspected fraudster was located in a select country and region when conducting a transaction. Global statistics represent every country worldwide.

To find out how this data varies by select countries and more, TransUnion’s holiday fraud trends can be found here.

In the first half (H1) of 2024, 4.6% of all attempted digital transactions where the consumer was located in Kenya were identified as suspected Digital Fraud in a recent TransUnion® (NYSE:TRU) analysis. Kenya had the 10th highest rate of suspected Digital Fraud in the first half of 2024 out of the 19 countries and regions for which TransUnion provided regional breakdowns.

TransUnion also determined that retail, gaming, and communities (online dating, forums etc.) were the industries that had the highest suspected Digital Fraud rate for transactions where the consumer was in Kenya during the analysis period.

Some of these findings are in the newly released TransUnion H2 2024 Update to the State of Omnichannel Fraud Report, which explores fraud trends in the first half (Jan. 1-June 30) of this year. It found that some industries were particularly targeted, even though Digital Fraud affects many industries in Kenya.

This is at a time when 80% of Kenyan consumers said in Q2 2024 that they were targeted with online, email, phone call or text messaging fraud attempts in the last three months, and of those consumers only 8% reported falling victim^[1].

"Despite the good-faith efforts that are being made by global organisations to identify and prevent fraud to date, fraudsters continue to evolve. In that sense, businesses should ensure that they are taking advantage of fraud prevention technologies such as identity verification, IP intelligence, device reputation and synthetic identity detection as critical components of their fraud prevention programs,” said Amritha Reddy, senior director of fraud solutions at TransUnion Africa.

Table 1: Industries with the Highest Rate of Suspected Digital Fraud Attempts Where the Consumer was in Kenya in H1 2024

Source: TransUnion TruValidate™

The communities industry experienced the largest percentage (11.5%) of suspected Digital Fraud globally in H1 2024, according to data in TransUnion TruValidate. Globally, TransUnion’s communities customers reported profile misrepresentation (where a user posts inaccurate information in a profile and/or uses bogus profile photos) as the most frequent type of Digital Fraud they witnessed in H1 2024. Communities was the industry with the highest suspected Digital Fraud rate in seven of the 19 countries and regions for which TransUnion provided breakdowns in H1 2024.

New Account Fraud Risk Threatens Digital Experiences

Digital fraud can occur at different steps in a customer’s transaction process, and more than two-thirds of business leaders surveyed by TransUnion indicated that at least 25% of their organisation’s new account openings are done online, with more than a third saying that it was 51% or more^[2].  For transactions where the consumer was in Kenya, 4.8% of digital account login attempts were suspected of Digital Fraud, with 4.8% of digital account opening attempts also being suspected of Digital Fraud in H1 2024.

“Digital Fraud waxes and wanes, but the trends in cybercrime and consumer scams are clear,” said Morris Maina, CEO of TransUnion Kenya. “Now and in the future, organisations face more sophisticated cybercriminals weaponizing identity data at scale to perpetuate first- and third-party fraud schemes. Fraud prevention is a necessary investment that needs to be as efficient as possible, using better data and risk signals, advanced analytics, and integrated technology, without increasing lost business and additional expense from false positives.”

TransUnion also determined synthetic identity fraud (the use of personally identifiable information or PII to fabricate a person or entity in order to commit a dishonest act for personal or financial gain) was the fastest growing Digital Fraud type volume-wise globally reported to TransUnion by its customers from H2 2023 to H1 2024, increasing 153%. Electronic fund transfers (also known as ACH/debit payments) fraud saw the highest YoY volume growth worldwide, up 113% from H1 2023 to H1 2024. However, promotion abuse (consumers or fraudsters taking advantage of marketing offers to receive unintended financial incentives) was the most common Digital Fraud type globally in H1 2024, accounting for 3.6% of all Digital Fraud reported to TransUnion by its customers.

About the Analysis

TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate. The rate or percentage of suspected Digital Fraud attempts reflects those which TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation — compared to all transactions assessed.

Download the TransUnion H2 2024 Update to the State of Omnichannel Fraud Report to learn more. Specific country and regional data in the report include Kenya, Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Mexico, Namibia, South Africa, the Philippines, Puerto Rico, Rwanda, Spain, the United Kingdom, United States, and Zambia.

^[1] TransUnion survey of 500 Kenyans from May 1-10, 2024

^[2] TransUnion business survey of 801 business leaders from May 14–29, 2024

The consumer lending market in Kenya reflected a mix of resilience and optimism in the first quarter of this year, according to TransUnion Kenya’s Q1 2024 Kenya Market Analytics Report. This has come on the back of lenders, equipped with deeper insights and advanced tools thanks to the evolving regulatory environment, becoming better positioned to meet the demands of a dynamic and evolving consumer market.

During the first quarter, the Central Bank of Kenya (CBK) raised the Central Bank Rate (CBR) to 13.0%, up from 12.50% in the previous quarter. The Kenyan Shilling (KES) continued to depreciate against major international currencies during the same quarter, further influencing the local credit environment.

"Q1 2024 could be defined as a quarter of expectation. We anticipated a return of investor confidence and an increased appetite for lending. To this end, active accounts grew by a small margin of 0.2% quarter-over-quarter (QoQ), but with a significant year-over-year (YoY) growth of 20%. This reflects a cautious optimism among lenders as they started to regain confidence in the market," says Morris Maina, CEO at TransUnion Kenya.

Continued growth in mobile loans

Mobile loans remained the most common form of credit in Kenya, accounting for 52.79% of all active loan accounts with a total balance of KES 158.8B. The first quarter of 2024 saw the opening of 3.92M new mobile loan accounts, an 11.02% increase from the previous quarter. However, the average quarterly borrowing limit per borrower decreased by 7.48% from KES 16.86K to KES 15.6K, indicating a measured approach by both lenders and borrowers in the first quarter’s economic climate.

The evolving regulatory environment played a role in contributing to more people applying for mobile loans, with licensed FinTechs now submitting data to TransUnion. The result is better insights into the overall market and into the health of consumers, enabling lenders to make better informed decisions on credit applications.

Low-value overdrafts (ODs) — the lifeblood of accessible credit in the Kenyan market — represented a significant 32.81% of all active loan accounts, with over 9.84M active accounts holding a balance of KES 34.69B at the end of Q1 2024. The first quarter 2024 dip in low-value ODs originations saw the volume of new accounts opened retracting to 5.36M, a 40.29% decrease from the 8.97M in the previous quarter.

There was also a 32.57% drop in the value of new, low-value ODs booked to KES 4.5B from the previous

quarter's KES 6.68B. The average quarterly limit increased by 12.93% from KES 745 to KES 818.

The quarter marked a contraction in unique borrowers of low-value ODs to approximately 7.60M from

8.02M (-5.14%) the previous quarter.

High-value overdrafts reflected a tightening of credit

High-value ODs, while comprising a small percentage (1.89%) of all active loan accounts, held a significant balance of KES 499.1B. The first quarter of 2024 saw a 25.3% reduction in the number of new high-value overdraft accounts, with the value of these overdrafts decreasing by 17.55% to KES 29.36B. This trend suggests tighter credit conditions and more selective lending practices in this segment.

The banking sector remained the backbone of Kenya's credit market and held more than 96% of all loan balances, accounting for 27.18M active accounts. Even though there was a slight decline in the number of new accounts opened, the sector's dominance underscores its critical role in providing credit to both consumers and businesses.

Increased new asset finance limits

Asset finance is a niche product and comprised 0.32% of all active loan accounts in Q1 2024 — just 97.41K — but it made up a balance of KES 200.77B and continued to play a critical role in the economy. The first quarter of 2024 saw a significant 27.06% drop from 6.66K accounts opened in the previous quarter to 4.86K accounts. Additionally, the total value of new asset finance booked receded 22.78% to KES 12.84B from KES 16.63B. Nevertheless, the average quarterly limit grew 5.86% from KES 2.5M to KES 2.64M.

Millennials continued emergence as a driving force in credit

Millennials (25-45 years old) accounted for a substantial portion of the principal amounts across several loan categories, including mobile loans (51.1%), personal loans (49.6%), and asset finance (16.5%). This demographic's strong presence underscores the need for financial institutions to innovate and provide products that cater to the unique preferences and behaviours of younger borrowers.

“Kenya has a dynamic and evolving lending market, with diverse credit products and solutions available that respond with agility to consumers’ and businesses’ needs,” says Maina. “While some challenges remain, efforts towards extending financial inclusion even further, along with technological advancements, are shaping the country’s future credit market.”

The TransUnion Q1 2024 Kenya Market Analytics Report provides an in-depth analysis of the macroeconomic environment and its influence on credit trends within the country. It is available to download here.

Information and insights company TransUnion has published its latest Consumer Pulse Study which shows that Kenyan households experienced a modest financial rebound in the second quarter of 2024, largely driven by new business ventures, enhanced debt management, and less impact from job losses.

According to the study, 34% of consumers saw an increase in income in the last three months, led by gains among the Gen Z (18–26 years old) and Millennial (27–42 years old) groups. While a similar number (36%) of consumers also reported a decrease in income over the last three months, optimism about future income is high with 85% of consumers expecting an increase over the next 12 months. This positive outlook is particularly prevalent among younger generations.

Consumers’ ability to pay their bills in full increased significantly, with 64% saying that they would be able to do so in Q2 2024, while those unable to pay decreased by six percentage points to 36% compared to the same time last year. Kenyan consumers have been resolute in tackling their outstanding debts: 51% opted to pay partial amounts if they were unable to settle them in full, and one-third (33%) of consumers are prepared to utilise savings to service their debts.

Behaviour trends and financial choices

Over the past three months, consumers cut back on non-essential expenditure, with 56% of households, particularly Gen X (43–58 years old), reporting reduced discretionary spending. Across all generations, 49% of consumers are expecting to reduce discretionary spending in the next three months and 42% anticipate cutting back on large purchases like appliances and vehicles. However, consumers plan to direct their increased disposable income towards retirement funds (48%), bills and loans (41%), and digital services (38%).

A growing number of households (41%, compared to 30% in Q2 2023) have increased their contributions to emergency funds as a strategic measure to buffer against potential payment shocks.

“The possible easing of inflationary pressures in the near future may lead to growth in disposable income, which could in turn support household consumption in 2024. This may be especially true if the expected income increases come to bear and consumers see fit to increase their discretionary spending, and reinstate the digital services, memberships and subscriptions that were cancelled during the quarter,” says Morris Maina, CEO of TransUnion Kenya.

Credit and financial inclusion

Financial inclusion in Kenya is on the rise, driven by the adoption of mobile technologies and digital payment methods. However, while nearly all (99%) consumers deemed access to credit as essential, only 36% of consumers feel they have sufficient access to credit – a slight improvement from 33% a year ago.

The demand for credit remains high, with 60% of consumers planning to apply for new credit, or to refinance existing credit, within the next 12 months. Millennials (55%) and Gen X (58%) show the greatest intention to take out new personal loans, while 38% of respondents are considering new mobile loans. Interest in ‘buy now, pay later’ (BNPL) services has grown, with 33% of consumers planning to explore this credit option (a five percentage-point increase from Q2 last year).

Despite the demand for credit, 66% of consumers who intended to apply ultimately chose not to. The primary deterrent is the high cost of credit (41%), with the recent increase in the policy rate raising the average commercial bank lending rate to the highest level in eight years.

Monitoring credit reports

The study shows that monitoring their credit status is crucial for Kenyan consumers, with 91% considering it extremely, very or moderately important. The frequency of credit report checks increased, with 59% of respondents reviewing their reports at least monthly. Consumers (60%) believe that including alternative data in credit reports, like rental payments and BNPL loans, could improve their credit scores.

Fraud and consumer education

Kenyan consumers continue to embrace digital platforms, with 42% conducting at least half of transactions online, up 10 percentage points from last year. However, digital fraud remains a significant concern. In Q2 2024, 72% of consumers reported being targeted by digital fraud schemes but avoided falling victim, and 8% reported being targeted and claimed they fell victim. Vishing (45%, compared to 40% in Q2 2023), smishing (44%, compared to 40% in Q2 2023), and phishing (36%, compared to 33% in Q2 2023) scams are on the rise, but awareness of digital fraud schemes is high.

Consumer concern about sharing personal information remained significant at 91%, albeit down from 94% in Q2 2023. Concerns related to sharing personal information included invasion of privacy (81%) and fear of identity theft (67%), emphasising the necessity for robust security measures and consumer education to uphold trust in digital platforms and encourage greater use of digital services.

“This research shows how important it is for consumers to monitor their credit records regularly. Early detection of fraudulent activities that could impact their credit scores enables consumers to take timely corrective action,” says Maina.

Consumers can find out more about TransUnion’s Nipashe here.

Kenya’s economic landscape showcased remarkable resilience in the latter part of 2023, with gross domestic product (GDP) growth coming in at 5.9% in the third quarter of 2023, compared to 4.3% in the corresponding quarter of 2022. Against this backdrop, TransUnion Kenya’s latest Q4 2023 Kenya Credit Industry Insights Report showed a state of flux in the credit market, shaped by macroeconomic shifts, consumer behaviour changes and technological advancements.

In December 2023, the Central Bank of Kenya (CBK) adjusted the Central Bank Rate (CBR) to 12.50%. This increase from 10.50% had impacted the cost of loans and Kenyans’ repayment capacity. The depreciation of the Kenyan Shilling against major international currencies has also put further pressure on the local economic and credit landscape.

“The Q4 2023 Kenya Credit Industry Insights Report tells a story about the evolving credit landscape in Kenya that extends beyond the numbers. It is about enhancing financial inclusion and creating equitable opportunities for all Kenyans. By embracing mobile technology and adapting to economic shifts, we are working hard to enable more people to access the credit they need to thrive, even in challenging times. This commitment to financial inclusion drives our nation's economic resilience and growth," says Morris Maina, CEO at TransUnion Kenya.

Mobile loans exhibit a pullback, signalling cautious borrowing

In Q4 2023, Mobile loans accounted for 50.61% of all active loan accounts in Kenya holding a collective balance of KES 148.7B, but the number of new mobile loans and their value decreased by 20.5% and 9.5% respectively from Q1 2023 to Q4 2023. This contraction mirrors the cautious stance of consumers amidst a fluctuating economic environment.

Low-value overdrafts indicated a nuanced shift in the financial landscape

At more than 10.44 million loan accounts, low value overdrafts (less than KES 6,000 of the principal amount) are the lifeblood of accessible credit in the Kenyan market. These represent a significant 34.89% of all active loan accounts, holding a balance of KES 13.06B. TransUnion observed a 15.9% reduction from the previous quarter’s KES 7.94 billion in the value of new, low value ODs booked to KES 6.68B. Despite this, the average quarterly limit edged up 2.05% from KES 730 to KES 745. This slight increase may suggest a more nuanced shift in the financial landscape or even a strategic loan structuring by lenders to accommodate evolving market needs.

High-value overdrafts, indicated a shift toward higher borrowing limits

High value overdrafts (amounts higher than KES 6,000 of the principal amount) made up 2.03% of all active loan accounts in the local market, commanding an impressive balance of KES 506.6B. The value of new high value overdrafts booked increased to KES 35.61B in Q4 2023 from the KES 20.9B of the comparative quarter last year. This generated significant growth in the average quarterly limit and suggests a shift towards larger borrowing amounts for qualifying applicants. To this point, there were approximately 270,000 unique high value overdraft borrowers in Kenya.

The Banking sector maintained lion’s share of balances

The banking sector remained the backbone of the credit industry with the highest loan balances, accounting for 96.16% of the market with 27.03 million active accounts. However, the microfinance sector (741.9k active accounts constituting 0.81%), FinTech (1.43 million at 0.22%), and Savings and Credit Cooperatives (SACCOs) (336.8k at 1.01%) reflect the evolving credit ecosystem of the country.

Millennials shaping current and future credit trends in Kenya

"Millennials are increasingly becoming the backbone of our credit economy. Their distinct financial behaviours and preferences are shaping the way we think about and offer credit products. It remains imperative that we continue to innovate and tailor our offerings to meet the unique demands of this vital demographic," says Maina.

The report shows that Millennials represented a significant portion of borrowers across various loan products, indicating their critical role in the credit sector. For instance, they accounted for 51.1% of the principal amount of mobile loans as well as 52.9% in personal loans. Millennials also had the highest principal amount (43.7%) of all demographics in low value overdrafts, and asset finance (16.2%). These figures underscore how important it is for service providers to tailor their financial products and services to meet the unique needs and preferences of this demographic.

“The TransUnion report reinforces how dynamic the credit market is in Kenya. It is shaped by several macro-economic factors like inflation, CBR, and the depreciation of the Shilling. By using wider credit data and insights as part of their decisioning, financial institutions can consider applications from an expanded Kenyan credit market to further drive financial inclusion in the country,” concludes Maina.

The credit sector in Kenya remains a critical component of the country’s broader financial ecosystem. As is evident by the TransUnion report, the credit environment in Kenya drives and offers opportunities for both consumers and businesses alike.

The TransUnion Q4 2023 Kenya Credit Industry Insights Report provides an in-depth analysis of the macroeconomic environment and its influence on credit trends within the country. It is available to download here.

TransUnion found across industries in 2023, 3.3% of all transactions where the consumer was in Kenya were flagged as being suspected Digital Fraud – a 16% YoY decrease.

The TransUnion report revealed that nearly one in seven (13.5%) newly created accounts are suspected to be created via Digital Fraud globally in 2023, largely driven by bad actors using fabricated or stolen identities. This may indicate a shift in the tactics deployed by fraudsters hoping to engage earlier in the transactional process.

Examples of the types of transactions that take place during the account creation process include account signup, registration and loan origination. Among the industries globally that saw the highest percentage of digital account creation transactions suspected to be Digital Fraud globally in 2023 were retail (44.7%), travel and leisure (36.0%), and video gaming (31.5%).

“This early-phase new account Digital Fraud may represent a paradigm shift of sorts among fraudsters globally,” said Morris Maina, chief executive officer at TransUnion Kenya. “In lieu of using traditional tactics to gain access to and ultimately compromise existing accounts, they are increasingly choosing to create new accounts that they can control themselves. These fraudsters leverage synthetic identities assembled in large part through the use of credentials gathered as a result of one or multiple data breaches.”

In contrast, for transactions where the consumer was in Kenya, the highest percentage of suspected Digital Fraud in the online customer journey occurred at account login, at 4.7%, varying widely by industry.

Retail Saw the Highest Suspected Digital Fraud Rate in 2023 Globally, While Online Gaming Experienced the Highest Rate in Kenya*

Source: TransUnion TruValidate™

The study found that 5% of all global digital transactions were suspected to be Digital Fraud in 2023, with the volume of risky transactions up 14% YoY and 105% from 2019 to 2023. This growth continues to outpace the growth in digital transactions, which rose 90% from 2019 to 2023.

Globally, retail surpassed gaming as the industry seeing the highest rate of suspected Digital Fraud in 2023 at 8.7%, up 21% YoY. In addition, the telecommunications industry saw a 111% YoY increase in the suspected Digital Fraud rate, up to 4.5%.

“In recent years, the global retail industry has consistently been among those with the highest suspected fraud attempt rates. However, in 2023 it climbed to the top of the list,” said Maina. “As a result of credentials stolen in data breaches, often in industries other than retail, it has become increasingly easy for fraudsters to perpetuate attacks that leave retailers vulnerable to account takeover.”

TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate. The rate or percentage of suspected Digital Fraud attempts reflect those that TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation —compared to all transactions assessed.

The report’s findings are based on proprietary insights from TransUnion’s global intelligence network, and includes data from Kenya, Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, South Africa, Spain, the United Kingdom, the United States and Zambia.

For more information and insights about the global fraud trends download the TransUnion 2024 State of Omnichannel Fraud Report.

*Some industries were excluded from the Kenya study due to a lack of statistically significant data.

“TransUnion has built significant momentum in implementing and embedding best in class people practices that have contributed to us having high employee engagement and a strong employer brand in the countries we operate in on the continent,” says Ndivhu Nepfumbada, Chief Human Resources Officer at TransUnion Africa. “Our teams in South Africa, Kenya, and the GCC Africa show tremendous affinity for our vision and mission, with the working environment we’ve created forming a solid and powerful foundation for employees to achieve their career goals and dreams.”

The Top Employers Institute assesses HR best practices worldwide and recognises employers that provide employees with the best working conditions and opportunities for personal and professional development. TransUnion is one of a few select companies in 122 countries and regions across five continents to have been certified and recognised since the TEI’s establishment more than 30 years ago. These certified Top Employers positively impact the lives of more than nine million employees all over the world.

TransUnion Africa CEO Lee Naik said that the certification across the Kenya and South African businesses recognises their significant efforts made in not only attracting industry-leading talent, but creating and maintaining working environments where high-calibre individuals feel that they can achieve their potential and make a meaningful difference to the world around them.

“The Top Employers certification process is challenging and thorough, and the outcomes we achieved in the final awards showcase our investment in building and nurturing a highly engaged workforce that is excited about and committed to delivering best-in-class solutions for our customers,” Naik said.

TransUnion GCC Africa is a fully virtual employer that has grown to more than 800 associates in less than three years. “Our unwavering focus on fostering diversity, equity, inclusion and belonging, enables greater opportunities for our associates across Africa. It has attracted a workforce that is more than two-thirds female, and that includes a much larger than legislated number of differently-abled people – most who wouldn’t otherwise be able to contribute to South Africa’s economy in a non-virtual workplace,” said Shobana Maikoo, Head of the GCC Africa.

The TEI programme certifies organisations based on the participation and results of their HR Best Practices Survey, helping them benchmark their performance through interactive feedback sessions and insightful reports. The survey covers six HR domains and includes areas like people strategy, work environment, talent acquisition, learning, wellbeing, and diversity and inclusion.

Globally, the analysis found 3.6% of all e-commerce transactions over the Black Friday period (23 – 27 November 2023) were suspected to be fraudulent. TransUnion also determined that the average number of suspected digital fraud attempts on any given day during that period globally was 15% higher than the same period in 2022, yet 50% lower than during the rest of 2023. ^[1]

The Percentage of Suspected E-Commerce Fraud at the Beginning of the Festive Shopping Season, Compared to the Rest of the Year

* ^{Includes Nov. 11 for Hong Kong}

“Just as the holiday season drives consumers online to begin shopping for gifts for their loved ones, so does it become a destination for fraudsters seeking to take advantage of this time for their financial gain,” said Steve Yin, global head of fraud at TransUnion. “Online retailers must ensure that consumers shopping their sites for the best deals are at the same time protected from fraud in the most seamless and friction-right way possible.”

The study also revealed the suspected digital fraud rate for each day in the holiday shopping period for transactions where the consumer was in Kenya during the transaction and globally. Unlike last year when Black Friday (25 November 2022) saw the highest suspected digital fraud rate, this rate was the highest on Cyber Monday, 27 November.

The Suspected Digital Fraud Rate Varies for Each Day of the 2023 Holiday Shopping Weekend

As part of this analysis, TransUnion also determined the top indicators of fraudulent e-commerce transactions during the holiday shopping season globally. This year, transactions per IP (triggered with an unusual volume of activity from a single Internet Protocol (IP) address to a customer’s site in a short time) and transactions per device (triggered with an unusual volume of activity from a single device to a customer’s site in a short time) were the leading indicators for potential fraud attempts.

“Anecdotally, we hear that payment card issuers tend to use a different model during holiday shopping periods to allow more authorisations to complete quickly,” said Morris Maina, CEO at TransUnion Kenya.  “It seems that a similar tactic is being used by retailers concerned that any friction may drive consumers away, reflecting the elevated competition and aggressiveness of retailers to ensure greater shopping volume.”

 Criminals exploit the lowered drawbridge

Criminal organisations look forward to this period of lax fraud controls. Knowing that guards are lowered, they commit account takeovers to empty loyalty points programs and make purchases using the hijacked customer’s existing payment wallet, for example. For retailers that allow guest checkouts, fraudsters will transact using stolen payment cards they’ve purchased from the dark web or have previously harvested from other data breach attacks.

While online sales numbers for retailers are now known, retailers will have to wait and hope that fraud losses do not pile up. The challenge is that they won’t know for some time; merchants will have to wait for an uptick in chargebacks, returns, and customer disputes before that becomes clear.

“The upcoming holidays mark the biggest shopping season of the year for retailers, but equipping themselves with the proper tools to detect fraud at the first warning sign is a year-round priority,” said Maina. “A critical way to minimise fraudulent transactions while at the same time protecting legitimate ones involves implementing holistic fraud solutions that can verify customer identity and authenticity at the very beginning of a transaction, including both account creation and login.”

TransUnion came to its conclusions primarily based on intelligence from its identity and fraud product suite, TransUnion TruValidate™, which helps secure trust across channels and delivers efficient consumer experiences. The rate or percentage of suspected digital fraud attempts reflect interactions which TransUnion customers either denied in real time due to fraudulent indicators or determined to be fraudulent after a manual review process—compared to all transactions it assessed for fraud.

To find out how this data varies by select countries and more, TransUnion’s holiday fraud insights can be found here.

Consumers interested in obtaining their TransUnion credit report can download the TransUnion Nipashe app.

^[1] For Hong Kong, all holiday analysis also includes Nov. 11

According to TransUnion’s Consumer Pulse Study, one of the significant factors contributing to the decrease in household income was job loss, with 30% of consumers reporting that someone in their household lost their job over the past month – an eight-percentage point increase from the previous year. Other factors impacting income included wage or salary reductions and declining small business revenue.

Many consumers have been forced to adjust their household budgets in response to these challenges, with as many as 62% cutting back on discretionary spending over the past three months, said Morris Maina, CEO TransUnion Kenya.

According to the Kenya National Bureau of Statistics, Kenya’s inflation rate unexpectedly rose to 6.8% in September 2023, up from the 6.7% in August. This is expected to increase some cost burdens for consumers, particularly around food prices. GDP grew by 5.4% in the second quarter, a slight increase from the previous quarter, primarily due to a rebound in the agricultural sector as the country recovers from its worst drought in four decades.

Looking ahead, consumers are bracing for further financial strain. A significant 39% of consumers expect an increase in bills and loans, while 44% expect their in-store and online shopping to decrease. In addition, 55% of consumers plan to make further cuts to their discretionary spending, and 47% expect a decrease in large purchases such as appliances and cars.

The survey also highlighted a decline in access to credit and consumer confidence in the credit market. Nearly all consumers (98%) believe access to credit is crucial. However, only one third (33%) feel they have adequate access to credit, a 12-percentage point drop from the previous year.

Fewer people are applying for credit, with 55% of consumers intending to apply for new credit or refinance within the next year, a five-percentage point decrease from the previous year. Millennials are particularly cautious, with only 49% intending to take on new credit, down from 60% last year. Despite this, mobile loans and 'buy now, pay later' (BNPL) services are gaining popularity among prospective borrowers, with 28% of consumers planning to explore BNPL.

Managing financial choices

Kenyan consumers continue to embrace digital platforms. Approximately 32% of respondents reported that at least half of their transactions are conducted online, similar to the previous year.

Most consumers (75%) believe monitoring their credit is very or extremely important. However, there has been a decline in the frequency with which consumers monitor their credit reports, with only 25% of those surveyed checking their reports monthly, compared to 33% the previous year. Most respondents (57%) believed their credit scores would improve if businesses used alternative data sets not included on a standard credit report, like rental payments, gym membership dues, short-term loan histories and BNPL products.

Identity risks and usage

Digital fraud is on the rise. More than seven in 10 respondents (73%) reported being the target of fraud schemes in the past three months. An additional 8% was targeted and fell victim. The most common scams were money or gift card scams (44%), vishing (40%) – fraudulent phone calls designed to trick you into revealing personal data – and smishing (40%), fraudulent text messages with the same aim.

Concerns about sharing personal information have risen, with 94% of consumers expressing worry, a seven-percentage point increase from the previous year. The primary concern cited was the invasion of privacy (81%), followed by fear of identity theft (68%). These findings underscore the need for stringent security measures and consumer education about data protection to maintain trust in digital platforms.

“Overall, it's clear that consumers are increasingly aware of the risks associated with digital fraud. With rampant scams, consumers are cautious about sharing personal information, fearing privacy invasion and identity theft. This indicates a significant need for stronger security measures and robust fraud prevention strategies in the digital space,” said Maina.

Consumers can get their free annual credit report from TransUnion here.

Among all industries, the global suspected digital fraud rate stood at 5.3% in H1 2023, up from 4.5% one year ago. Of all digital transactions made by consumers in Kenya, 3.7% were suspected to be fraudulent attempts in H1 2023.³

For transactions originating from Kenya, gaming (online sports betting, poker, etc) and logistics had the highest suspected digital fraud attempt rate among industries analyzed in H1 2023 at 10.5% and 9.8% respectively, with the rate in retail at 9.3%.³

Kenyans are, however, increasingly embracing digital transactions, which grew the most among industries analyzed by 269% in financial services and by 76% in video gaming when comparing the first half of 2023 to H1 2022 for transactions from Kenya. With its significant increase in transaction volume, the financial services sector saw a 313% increase in suspected digital fraud volume year-over-year (YoY), and suspected digital fraud in travel and leisure increased by 72% YoY for transactions from Kenya.³

Increases in the number of digital transactions in gaming and logistics (8.0% and 8.4% respectively) may have led to these higher suspected digital fraud attempt rates. In the logistics industry, the number of digital transactions decreased by 21.2% – despite this decline, this sector still has the second highest suspected digital fraud attempt rate in Kenya, and is still vulnerable to fraudsters.

These significant increases in the volume of suspected digital fraud attempts, along with the increased adoption of digital transactions, indicate that Kenyan businesses and consumers should seek meaningful solutions to prevent fraud.

“It’s not enough to look at fraud rates alone when attempting to measure the impact of digital fraud on any one particular industry or another,” said Morris Maina, CEO at TransUnion Kenya. “There are other factors that need to be considered. These include the overall size of the industry in question, whether that industry is growing and if so, how quickly. Only then is it possible to develop a more comprehensive perspective on just how digital fraud is impacting these industries. In addition, this can help identify where fraudsters may be focusing their efforts in future.”

Financial Services Saw the Greatest YoY Growth in Digital Transactions

While Gaming had the Highest Suspected Digital Fraud Rate Coming from Kenya

^{Source: TransUnion TruValidate™ data}

More than Eight in Ten Kenyan Consumers Report Having Been Targeted by Fraud

This new TransUnion analysis comes on the heels of its recent Q2 2023 Kenya Consumer Pulse Study which explored, among other things, consumer awareness of being targeted by any online, email, phone call or text messaging fraud attempt in the second quarter.

According to the study, more than seven in 10 respondents (73%) reported being the target of fraud schemes in the past three months but did not become a victim of it. An additional 8% said they were targeted and fell victim. Among those targeted, the most common scams by which they reported being attached were money or gift card scams (44%), smishing (40%) – fraudulent text messages meant to trick you into revealing personal data – and vishing (40%) – fraudulent phone calls with the same aim. Furthermore, one third (33%) reported being targeted by phishing, fraudulent emails, websites, social posts, QR codes, etc. meant to steal data. ⁴

TransUnion came to its digital fraud findings based on intelligence from its identity and fraud product suite, TransUnion TruValidate, which helps secure trust across channels and delivers efficient consumer experiences. The rate or percentage of suspected digital fraud attempts reflect interactions which TransUnion customers either denied in real time due to fraudulent indicators or determined to be fraudulent after a manual review process—compared to all transactions it assessed for fraud.

Download the Omnichannel Fraud in H1 2023 Infographic for more findings including the rate of suspected digital fraud from select countries and regions globally, and the growing problem of synthetic fraud. Specific country and regional data in the analysis include the United States, Brazil, Canada, Chile, Colombia, Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, Philippines, Puerto Rico, Rwanda, South Africa, Spain, United Kingdom and Zambia.

Consumers who believe they may be a victim of fraud can find resources and information here.

^{1 Digital fraud involves the use of phishing emails, false websites, phony mobile apps, fake social media profiles, and other mechanisms to illegally obtain information and defraud consumers and businesses.}

^{2 The first half of the year or H1 refers to January 1 to June 30}

^{3 TransUnion TruValidate data}

^{4 TransUnion Consumer Pulse Survey}

Information and Insights company TransUnion Africa has named Aron Kamakil as its new chief information officer for TransUnion’s African operations, which include Kenya, Zambia, Botswana, and Malawi.

Kamakil has more than 13 years’ experience in senior technology roles in the financial services sector. In his new role, he will be responsible for TransUnion’s information technology (IT) business practices which support the company’s growing suite of products and services in region.

“Aron brings rich expertise and a strong technology and financial services background to TransUnion. His experience further enhances our continuing ability to grow and innovate, providing the solutions that improve the lives of Africa’s businesses and consumers,” said TransUnion Kenya’s chief executive officer, Morris Maina.

“I’m incredibly excited to join TransUnion at this major inflection point, as the move to a digital economy accelerates,” said Kamakil. “I look forward to supporting the company’s mission of Information for Good, helping businesses and consumers transact with confidence through the effective use of data insights and technology.”

Kamakil was previously the CIO for Retail Banking at NCBA Group, where he led delivery of strategic initiatives for the retail banking business. As Head of IT Service Management at NCBA Group, he introduced a 24/7 Network Operations Center and championed the adoption of the Information Technology Infrastructure Library (ITIL) framework to improve the quality of the business’s IT services. Before that, he was the Acting Head of IT at NCBA Rwanda.

He holds a BSc degree in Information Technology from Edith Cowan University Australia, and numerous technical and leadership certifications. 

Vishing has become more prevalent than ‘smishing’ – where fraudulent text messages attempt to trick people into revealing data – with 41% of targeted Kenyans having experienced this type of attempt. ‘Phishing’, where fraudulent emails, websites, and social posts intent on stealing data, was experienced by 36% of surveyed Kenyans.

At the same time, the top types of digital fraud which Kenyan consumers were most worried about differed from the attempts reported, as the biggest Kenyan consumer concerns were phishing (59%), account takeovers and identity theft (both 58%) and third-party seller scams on legitimate online retail websites (57%).

Data in the 2023 State of Omnichannel Fraud Report blends proprietary insights from TransUnion’s global intelligence network and a specially commissioned TransUnion consumer survey in 18 countries and regions globally.

The study showed that globally, 4.6% of all digital transactions were suspected to be fraudulent. This percentage is in line with the rates found in 2019. However, despite the similarities to the percentage prior to the pandemic, due to the marked rise in number of digital transactions in the last few years, the total volume of all suspected digital fraud attempts has increased dramatically. Globally, such attempts have increased by 80% from 2019 to 2022.

Morris Maina, chief executive officer, TransUnion Kenya, said: “We’re seeing a persistently high number of digital fraud attempts, with suspected digital fraud attempts originating from Kenya increasing most notably in the financial services sector, where the rate of attempts has increased by 309% since 2019. This reflects the overall accelerated adoption of digital technologies and rising online transactions as a result.

“Kenyan businesses need to take proactive steps to protect themselves and their customers. This means ensuring that identity proofing and authentication is up-to-date and as robust as possible.” 

Cyber criminals turn their attention to new industries 

Other Kenyan industries that have seen a rise in digital fraud attempts in comparison to 2021 include gaming, where the rate of attempts emanating from Kenya have increased by 102%, and travel and leisure by 37%.^[i]

At the same time, some industries, such as video gaming, retail, and telecommunications, saw a significant drop year-on-year, indicating that cyber criminals have turned their attention elsewhere. This may be testament to the increasing levels of control that providers are putting in place to help stop fraud and raise awareness of scams, although many people still fall victim to these schemes.

Maina continued: “Rates of digital fraud attempts by sector tend to change rapidly, as fraudsters innovatively shift focus to where there are new opportunities to make financial gain. They will be agile in targeting consumers and organisations as Kenya navigates this recent period of economic uncertainty.

“At TransUnion, we help businesses across a wide range of industries prevent fraud by using intelligent predictive solutions to deliver better experiences – helping to outflank those who would take advantage otherwise and reassure customers that their personal data will not be compromised.”

TransUnion monitors digital fraud attempts reported by businesses in varied industries such as gaming, financial services, healthcare, insurance, retail, and travel and leisure, among others. The conclusions are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in TransUnion’s flagship identity proofing, risk-based authentication and fraud analytics solution suite –TruValidate.

For more information and insights about our global fraud trends, please download the report here.

^[i] Changes reflect comparisons between data collected between Jan 1 and Dec 31 2022 – the latest full year dataset – and the same period in 2021.

The Top Employers Institute assesses HR best practices worldwide, and recognises employers that provide employees with the best working conditions and opportunities for personal and professional development. TransUnion South Africa is one of just 1,857 companies in 123 countries and regions to have been certified and recognised since the TEI’s establishment 30 years ago.

TransUnion Africa CEO Lee Naik said that the certification is a meaningful recognition of the investment the company makes into recruiting and retaining industry-leading talent, drawing on its people practices as key drivers of business growth on the continent and globally.

“The Top Employers certification recognises the priority we place on creating a holistic working environment for our associates across our Africa portfolio of businesses, so that they can achieve the greatest possible personal fulfilment alongside their professional success,” said Naik.

“Our approach, at every level of the business, is to create a platform for our associates in South Africa and in Kenya to make an impact and transform the lives of those around them, while they deliver best in class solutions for our customers. This means that we have a highly engaged workforce that is driven to succeed, even in challenging economic times, supporting the business’s vision of providing Information for Good,” he added.

“Being acknowledged as a Top Employer after less than two years of operation is a remarkable achievement for GCC Africa, and the more than 650+ associates that have joined us since we opened our virtual doors in March 2021,” says Avesh Singh, Vice President, Global Operations at TransUnion. “Our intentional focus on creating a sought-after working environment, despite being a fully virtual operation, has seen us evolve into an employer of choice. We are particularly proud of the GCC’s all-women leadership, and that more than 69% of its associates are women too.”

The TEI programme certifies organisations based on the participation and results of their HR Best Practices Survey. This survey covers six HR domains, and includes areas like people strategy, work environment, talent acquisition, learning, wellbeing and diversity and inclusion.

“TransUnion has brought to life the culture of inclusivity and belonging for every associate envisioned over the years,” says Ndivhu Nepfumbada, Chief Human Resources Officer at TransUnion Africa. “We are focused on a clear purpose to create multiple touch points and incentives throughout the year, delivering a high level of employee engagement throughout the business, truly putting our people at the heart of our success. We pride ourselves on a working environment that encourages our associates to bring their whole selves to work, to perform at their best while still achieving work-life balance.”

Naik added that being certified as a Top Employer emphasised the importance of creating a balance between being a high performance culture and nurturing an employee-focused environment.

“Being a part of a global organisation means that we can draw from the knowledge and experiences of our global counterparts – while also leading the way in creating a vibrant local culture that responds to the uniqueness of our businesses in South Africa and Kenya,” he said. “We are so proud of this certification, and will continue to build on our past achievements to maintain our status as an employer of choice for the continent’s most innovative talent.”

These findings are based on intelligence from billions of transactions contained in TransUnion’s TruValidate™ fraud analytics solution suite. The analysis also determined that the average number of suspected digital fraud attempts on any given day during that holiday period globally was 82% higher than during the rest of the year (Jan. 1, 2022 to Nov. 23, 2022). For transactions originating in Kenya, this percentage was 15% lower than during the rest of the year and was 42% higher than the same period in 2021.

The study also revealed the share of suspected digital fraud attempts for each individual day in the holiday shopping period for transactions in Keyna and globally. 

Breakdown of Risky Transactions During Holiday Period

“Fraudulent activity tends to be particularly prevalent in online retail during the holiday shopping season,” said Shai Cohen, senior vice president and head of global fraud solutions at TransUnion. “Despite the fact that consumers have begun returning in larger numbers to in-person shopping in the post-pandemic era, online retail continues to be the preferred means of holiday shopping for many. It’s important that online retailers ensure consumer security and privacy protections, which is important to consumers, but in a way which ensures a seamless shopping experience that minimises unnecessary friction.”

TransUnion also revealed in the analysis the top types of fraudulent e-commerce transactions globally. This year, promotion abuse (user abuses site promotions such as refer-a-friend, free giveaways, etc.) and account takeover (someone other than the owner of an account uses it without permission, indicating that the account has been maliciously compromised) were the top types of digital fraud in retail.

“Online retailers must equip themselves with the proper tools to detect fraud at the first warning sign, and without inhibiting the consumer journey,” said Morris Maina, chief executive officer TransUnion Kenya. “It’s more important than ever that these online retailers implement holistic fraud solutions that are able to verify customer identity and authenticity at the very beginning of a transaction without resulting in false positives that may cost them legitimate transactions.”

Consumers express more concern this holiday season

The increase of suspected digital fraud during the traditional busiest days of the holiday shopping season occurred as consumers express concern about being victimized. TransUnion’s 2022 Consumer Holiday Shopping Survey found that 63% of Kenyan consumers are concerned with being victimised by online fraud this holiday season.

TransUnion monitors digital fraud attempts reported by businesses in varied industries such as gambling, gaming, financial services, healthcare, insurance, retail, and travel and leisure, among others. The conclusions are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in TransUnion’s flagship identity insights, digital insights, omnichannel authentication, and fraud analytics solution suite – TruValidate™.

To find out how this data varies by select countries, download TransUnion's holiday fraud trends infographic 
 

 [1] The percent of suspected digital fraud attempts are those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions it assessed for fraud.

In all, 41% of respondents to TransUnion’s quarterly Consumer Pulse study¹ said their incomes had increased in the previous three months. Nearly two in three (31%) said their incomes had remained unchanged, while 28% reported decreased household incomes. Salary reduction was the top reason (29%) consumers said their household income had changed in the month preceding the survey, followed by starting a new business (26%).

These positive signs came despite Kenya’s annual inflation rate increasing to 8.3% in July 2022, according to the Kenya National Bureau of Statistics – the highest since June 2017. The main drivers of inflationary pressure were increases in the prices of food and non-alcoholic beverages (up 15.3% year-over-year), transportation (up 7%), and housing and utilities (up 5.6%). The increased costs of necessities are likely to have an impact on consumer spend in the coming months, according to Weihan Sun, Director of Research and Consulting at TransUnion Africa.

“It’s likely that inflationary pressure was curbing discretionary spending among Kenya’s households in the three months leading up to this survey, and we expect that this trend will continue. However, the fact that the majority of households are still able to service their bills and loan obligations is a sign of resilience, especially during uncertain macroeconomic conditions at a global level,” said Sun.

Of all respondents, 48% said they would make further cuts to their discretionary spending in the three months following the survey.

Regarding bills and debt management, 46% of all survey respondents who said they won’t be able to pay a current bill or loan in full intend to pay a partial amount that’s affordable to them, but not the entire outstanding balance. Another 41% of those unable to pay indicated they’ll use their savings to do so, while 40% are likely to borrow money from a friend or family member to service their current bills and debt obligations.

Only 35% of Baby Boomers expected to be able to pay their current bills and loans in full. As older consumers begin to enter retirement, this challenge is likely to become more ubiquitous due to the limited sources of disposable income available to service debt obligations among this age group of Kenyans, said Sun.

Nearly all consumers surveyed (98%) considered access to credit and lending products important to achieve their financial goals. Most consumers (60%) surveyed plan to apply for new credit or refinance existing credit in the next year, led by Baby Boomers, where two-thirds (68%) intend to do so within the next year, followed by Gen X at 63%, Millennials at 60% and Gen Z at 56%. The top three credit products among consumers who said they’ll apply for new loans or to refinance existing credit in the next year are a personal loan (48%), credit card (33%), or new mortgage, home loan or bond payment (28%).

Managing financial choices

Two-thirds (65%) of consumers said they conduct up to half of all transactions (finances, retail and business transactions) online, while 35% of Millennials and Gen X consumers claimed that they conduct most of their transactions online.  

Most consumers (78%) believe monitoring their credit is very or extremely important, and 77% said they monitor their credit at least once a month. Younger consumers were more active in monitoring their credit, with 23% of Gen Z consumers and 22% of Millennials monitoring their credit daily, compared to 9% of Gen Xers and 5% of Baby Boomers. Two-thirds (65%) believe their credit scores would increase if businesses leverage alternative data sets not included on a standard credit report, like rental payments, gym membership payments, and buy now, pay later (BNPL) products, among others.

Identity risks and usage

Nearly four in 10 (37%) consumers surveyed said they were unaware of any digital fraud schemes targeting them in the three months prior to the survey. A lack of awareness of digital fraud schemes was greatest among older consumers: 58% of Baby Boomers were unaware of any fraud schemes targeting them. This is concerning because many could have been targeted but still be unaware that they had become victims of fraud without realizing it due to this lack of awareness, said Sun.

Consumers who said they were targeted with digital fraud in the last three months noted the most common scams as money/gift card scams (50%), third-party seller scams on legitimate online retail websites (39%), and fundraising scams (28%). “Consumers and businesses need to stay vigilant to fraud attempts. In an increasingly digital world simple steps can make a big difference – something as simple as registering to receive SMS alerts when there is activity on their credit profile can make a big difference – empowering consumers with the knowledge to take action if it was someone else applying for credit in their name,” said Sun.

Consumers can get their free annual credit report from TransUnion here. 

  ¹TransUnion’s Consumer Pulse survey of 500 adults was conducted between 11–22 August 2022 by TransUnion, in partnership with third-party research provider, Dynata. Adults 18 years of age and older residing in Kenya were surveyed using an online research panel method across a combination of desktop, mobile and tablet devices. Survey questions were administered in English. To increase representativeness across resident demographics, the survey included quotas to balance responses to the census statistics dimensions of age, gender, household income and region. Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964.These research results are unweighted and statistically significant at a 95% confidence level within ±4.4 percentage points based on a calculated error margin.

Assisted by these scores and other information, the country’s banks and other financial institutions offer credit or loans, make lending decisions, and determine the interest that they will charge for these products by assessing the risk of each consumer that applies for credit.

One of the many ways lenders assess the risk of a loan is by referring to a consumer’s credit score – a three-digit number calculated from their credit history that is provided by any of the three credit reference bureaus currently operating in Kenya: Creditinfo Kenya, Metropol CRB, and TransUnion Kenya.

Despite the progress in usage of consumer credit scores, some borrowers continue to have concerns about the use of adverse credit information. Specifically, there is a perception that banks use adverse credit reports to deny borrowers access to the loans they have applied for. To alleviate this concern, the Central Bank of Kenya has mandated all CRBs to display prominently on credit reports the Banking (Credit Reference Bureau) Regulations 2020 statement that “a customer’s credit score should not be used as the sole reason by a lender to deny a customer a loan.” This statement will serve as a reminder of the appropriate use of credit reports and will be beneficial to both customers and lenders.

Only finance providers can decide whether to offer credit to a customer, or to decline their application. Credit bureaus provide some of the information lenders use when making the decision, but each finance provider has their own individual lending policies and criteria for granting credit to a consumer, just one of which is a credit score provided by any one of the three credit reference bureaus.

A credit report reflects a consumer’s payment behaviour over time, using a range of data, including payment history, credit utilisation and the number of credit enquiries requested from sources such as banks, micro finance institutions, savings and credit cooperative organisations (SACCOs), and traders. It can enable Kenyans to get access to credit products they might not otherwise be considered for and can lead to preferential interest rates, product features and conditions.

Payment history is the most important aspect of a credit score, because it shows how consumers have managed their finances, including any late payments. A consumer’s payment history is entirely within their control and responsibility – just as improving their credit score is made possible by a good repayment culture that includes borrowing wisely and repaying promptly.

Consumers that have never taken out a credit product do not have a credit score – which means that they haven’t been ‘tested’ with credit, and lenders may be uncertain if the loan they grant will be paid back according to the terms of their agreement. Consumers who don’t have a credit score can still apply for credit, but lenders are likely to set more stringent terms for first time borrowers as they commence their journey to building a credit score.

“Credit bureau information and insights enable a more inclusive lending system by providing objective data that helps lenders assess consumers’ ability to manage their credit. Ultimately, this system and the lending it supports enhances Kenyans’ quality of life and strengthens our economy,” says Morris Maina, CEO TransUnion Kenya. “Credit scores are factual representations of a consumer’s credit history. Finance providers have their own risk policies when it comes to extending credit, and a consumer’s credit information is just one factor they consider when they make decisions.”

“Access to credit is the foundation for a healthy economy, but one of the obstacles for credit access is a lack of information about borrowers,” says Kamau Kunyiha, CEO of Creditinfo Kenya. “Financial institutions need accurate and relevant information about consumers to help make informed lending decisions. This is why credit bureaus services are crucial – they provide the data financial institutions need to provide individuals and businesses access to essential financial products and encourage a healthier financial ecosystem.”

“Credit bureaus manage credit risk throughout a consumer’s financial life cycle, helping to increase financial institutions’ efficiency and reduce their exposure to risk,” says Gideon Kipyakwai Group CEO at Metropol. “We use information from a variety of sources, such as Banks, MFIs, SACCOs, HELB and other service providers to translate consumers’ credit behavior into a score that is just one measure used by financial institutions make their lending decisions.”

Existing regulatory frameworks in Kenya ensure greater financial inclusion, underpinning fair and equal access to credit information by consumers and businesses. Being able to extend credit based on informed decisions can fuel economic growth, increase consumer access to essential resources and enable more efficient allocation of risk, costs and financial reserves. Access to consumer credit information enables consumers and private companies to freely transact with each other as the more objective information the business has, the more accurately it can meet consumer needs and preferences.

 TransUnion’s data on fraud against businesses is based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite – TransUnion TruValidate™.

 The global insurance industry saw a year-on-year (YoY) suspected digital fraud attempt rate increase of 159% in Q2 2022, while the global logistics sector increased by 13%. In contrast, TransUnion observed a -20% decrease in the rate of suspected digital fraud attempts in insurance worldwide for transactions originating from Kenya. The most common type of fraud reported to TransUnion by its insurance customers in Q2 2022 was first-party application fraud, which involves fraudulent applications containing intentionally inaccurate information with the intention of receiving certification, lower rates or better terms for a policy/contract.

 “We have observed interesting trends in the first half of 2022 with suspected fraudulent activity in the insurance industry continuing to be elevated,” said Shai Cohen, senior vice president of global fraud solutions at TransUnion. “In recent years, we’ve seen fraudsters shift their industry focus each quarter. At this time, we believe the insurance industry is seeing more ‘soft fraud’ because some consumers may be representing their policies incorrectly in an effort to save money, especially in a high inflation environment that places more pressure on their wallets.”

Year-on-Year Growth Rates of Digital Fraud Attempts (from Q2 2021 to Q2 2022)

Shifts in Kenya Run Counter To Global Trends

 In Kenya, the rate of suspected digital fraud across all industries decreased 27% YoY in Q2 2022. TransUnion observed the largest declines from Kenya-based transactions in communities (which include online forums and dating) (-70%), telecommunications (-42%) and insurance (-20%).

 The industry that saw the biggest increase in the rate of suspected digital fraud attempts coming from Kenya was logistics, which increased 61% during that period. The most common fraud reported to TransUnion by its logistics customers in Q2 2022 was shipping fraud, where buyers spoof shipping addresses, or a seller receives payment for goods or services, but never ships the goods to the buyer. Other industries with increases coming from Kenya were gambling (36%) and retail (23%).

 “The focus across industry has been on identifying more of the good transactions and customers to allow them to pass with less friction,” said Amritha Reddy, Head of Fraud at TransUnion Africa. “Strong fraud and authentication practices decrease false positives and focus fraud-fighting resources on the minority of interactions that warrant scrutiny. By reducing the pool of manual reviews and customer interrogations, organizations can dramatically reduce costs, increase revenue, and improve the overall customer experience.”

For worldwide and regional breakdowns around how much the suspected digital fraud attempt rate recently changed, what types of fraud are most prevalent in certain industries and more, please download the infographic.

The rate of digital fraud originating from Kenya decreased in Q1 2022, with the percentage of suspected online fraud attempts declining -60.9% from the same quarter last year, in line with the global decrease of -22.6% during that same time period. TransUnion’s (NYSE:TRU) quarterly digital fraud analysis observed that while the overall rate of suspected digital fraud declined in Kenya, there were significant shifts year-over-year (YoY) within certain industries.

Sectors such as financial services, telecommunications and communities (i.e. online dating) all saw YoY decreases in the attempted digital fraud rate from Kenya. Conversely, fraudsters in Kenya increased their suspected scams in sectors such as gambling, and travel and leisure.

“What we observed in Kenya and globally is that sophisticated fraudsters are shifting their focus to target new industries as sectors previously targeted have ramped up fraud prevention measures. In other words, fraudsters are constantly seeking out new opportunities based on vulnerabilities,” said Amritha Reddy, Head of Fraud at TransUnion South Africa.

“What’s critical is that companies don’t become complacent with fraud prevention measures as fraudsters become ever more sophisticated. At the same time, companies should leverage this temporary shift in fraudulent activity to focus on optimising customer experience without compromising security.”

Rate of Digital Fraud Attempts Decrease in Kenya, but Some Industries See Growth

The financial services industry saw the largest YoY decrease in the suspected fraud attempt rate for digital transactions coming from Kenya, at -71.5%. When digital fraud in financial services did occur, TransUnion found the most dominant type in that industry globally was first party application fraud. That’s when an individual completes fraudulent applications that contain intentionally inaccurate or manipulated information with the intention of receiving a lower rate or better terms for a policy or contract.

Fraudsters have cycled through certain industries during the pandemic and are now rotating to other vulnerable sectors. This makes these vulnerable sectors more prone to digital fraud attempts. The gambling industry exhibited the greatest YoY growth in the rate of suspected digital fraud coming in Kenya in Q1 2022, at 48.7%, with the most prevalent type of fraud in that sector globally being promotion abuse – where a user abuses site promotions such as refer-a-friend, reload deposit bonuses and free giveaways.

The travel and leisure industry experienced the second highest YoY increase from Kenya, at 25.1%, where fraudsters look to take advantage as the sector opens up and Kenyans start travelling again.

Year-over-year Growth Rates of Suspected Digital Fraud Attempts (Q1 2021 to Q1 2022)

“As digital fraud rates stabilise in Kenya during a period when fraudsters are searching for new vulnerabilities, it’s important that organizations shift their focus to identifying more of the ‘good’ customers and transactions to drive revenue and customer lifetime value. By reducing false positives, false declines and manual review rates, organizations can improve their customer experience through trusted connections while still keeping the fraudsters at bay,” said Reddy.  

TransUnion derived  to its conclusions  on fraud against businesses on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite – TransUnion TruValidate™. The percent or rate of suspected digital fraud attempts are those that TruValidate customers either denied or reviewed due to fraudulent indicators compared to all transactions that were assessed for fraud.

For worldwide and regional breakdowns around how much the suspected digital fraud attempt rate recently changed, what types of fraud are most prevalent in certain industries and more, download this infographic.

“If you’re struggling to make ends meet, there are several debt relief options available to you,” says Morris Maina, chief executive officer of TransUnion Kenya. The one thing that you should not do is to resort to so-called ‘credit repair agents’, who claim to be able to remove credit listings and provide clearance certificates for an upfront fee.

“A quick fix to get your credit back on track may seem tempting, but it’s nothing more than a scam. This practice is illegal, and you could end up losing your money. If you’re battling to pay your bills, you should proactively talk to your lenders to make arrangements; use credit responsibly; and know your credit standing,” said Maina.

To avoid late payments and adverse credit listings, here are TransUnion’s top five tips.

Talk to your banks and lenders early and often

If money is tight and you’re worried you’re going to miss a payment or two, it’s best to contact your lender before the payment is due to make alternative payment arrangements. You can explain your situation and ask whether they can offer any assistance. Don’t just ignore your bills.

Don’t just stop paying your bills

“The worst thing you can do in a financial crisis is to just stop paying your bills,” warns Maina. If you stop paying your bills without talking to your lenders, or making arrangements for a payment holiday, your credit score will be affected negatively.

Consider taking a payment holiday

A payment holiday is an agreement with your credit provider/s to temporarily stop making repayments on your loans for an agreed period. “It is important to remember that you still owe the amounts that you haven’t repaid during your payment holiday. These will have to be repaid. Your credit provider will be able to explain all the details and how this will work,” said Maina.

Keep protecting your credit health

Many Kenyan consumers are facing some tough financial choices right now. "We encourage you to pay what you can to avoid late payments on your credit report. If you can’t make minimum payments, talk with your lenders to find out if they’re offering any assistance. The important thing is to pay all of your bills on time if you can. For most people, paying on time is the biggest factor that affects your credit score,” said Maina.

Check your credit report

Checking your credit report is an important step on the road to financial health. You can download your credit report for free once per year from TransUnion and other credit bureaus. You can also request a credit report or access your Credit Reference Bureau (CRB) clearance certificate through TransUnion’s Nipashe, which allows consumers to easily access their credit information through SMS. Your first clearance certificate is free.

To get a free copy of your credit report from TransUnion, simply SMS your name to 21272 and register for Nipashe. You can then download your free credit report or request your credit status. You can also send an email to info@transunion.com or download TransUnion’s Nipashe app to your Android smartphone via the Google Play Store.

Disclaimer: SMS and Registration charges apply at Kes.19 and Kes.50 respectively.

[1] https://www.worldbank.org/en/country/kenya/brief/monitoring-covid-19-impact-on-households-and-firms-in-kenya

“While an adverse listing may affect your ability to get credit in the short term, it’s never too late to start remedying the situation,” says Morris Maina, chief executive officer of TransUnion Kenya.

“Adverse credit listings are a result of poor repayment history on one or more loans or credit cards – it could be a late, missed or even partial payment. These listings will be reflected in your credit report, and will lower your credit score and potentially make it more difficult to get a loan or credit card. But there’s good news: a poor credit history can be rectified over time by establishing better financial habits,” said Maina.

So where do you find out if you have anything adverse listed against your name?

Start by reviewing your credit report

Your credit report is a powerful tool which can help you establish and understand your financial health – and you can get it for free once a year from TransUnion and other credit bureaus. Your credit report reflects your payment behaviour overtime, and includes information from sources like banks, micro finance institutions, Sacco’s and traders. Be sure to identify any red flags such as defaults because these have a hugely negative impact on your credit score.

What is a default?

If you’ve missed a payment for three consecutive months or more, this will be recorded on your credit report because you have failed to make (or defaulted) your payment. A default history stays on your credit report for five years and is only removed after full repayment and after this time has elapsed. In terms of the Credit Reference Bureau Regulations, 2020 a credit provider must give you one month’s written notice, informing you that your default will be reported to the credit bureau.

How do you address adverse listings on your credit report?

When paid up, defaults change your status from non-performing to performing, with a default history. This information is removed five years after full repayment of the facility. If there is inaccurate information on your report, you can lodge a dispute. Once your dispute is logged, it takes TransUnion up to five working days to review and issue a Notice of Dispute. Within 21 days, the listing institution completes the necessary investigations and issues a Notice of Resolution. You can do this by emailing info@transunion.com.

“Be very careful of so-called 'credit repair agents' who claim to be able to remove valid listings for an upfront fee. This practice is illegal, and you could end up losing your money,” said Maina.

How can you improve your credit score?

“There are four keys to improving your credit score,” says Maina:

• Manage your accounts. Make sure you pay your accounts in full every month if you have any. Partial payments can negatively impact your score and leave you playing catch-up with growing outstanding debt.
• Limit your amount of debt. Keep the utilisation of your current credit facilities below 35% of your limit.
• Grow your credit history. Long-standing credit accounts that are consistently settled in full reflect positively on your repayment reliability. It also helps to maintain a healthy mix of secured credit (home loans and vehicle finance) and unsecured credit (personal loans and credit cards).
• Limit your enquiry activity. Don’t shop around for too much credit at the same time. Too many applications in a short space of time could raise a red flag to lenders about your current financial situation.

You can download your credit report for free once every 12 months from TransUnion and other credit bureaus in the country. You can also request a credit report or access your Credit Reference Bureau (CRB) clearance certificate through TransUnion’s Nipashe, which allows consumers to easily access their credit information through SMS. Your first clearance certificate is free.

To get a free copy of your credit report from TransUnion, simply SMS your name to 21272 and register for Nipashe. You can then download your free credit report or request your credit status. You can also send an email to info@transunion.com or download TransUnion’s Nipashe app to your Android smartphone via the Google Play Store.

Disclaimer: SMS and Registration charges apply at Kes.19 and Kes.50 respectively.

Globally, this is 3.7% higher than the same five-day period leading up to Cyber Monday last year. For transactions originating from Kenya, the percentage of suspected fraudulent transactions decreased by 16.5% when comparing those same periods. These findings are based on intelligence from billions of transactions contained in TransUnion’s fraud analytics solution suite, TruValidate™.

The analysis also found the top two reasons potentially fraudulent e-commerce transactions globally were identified during this timeframe were the number of accounts per device (which triggers when a device accesses a certain number of accounts during the period), and evidence of previous fraud on the account or device.

Percentage of Suspected Online Fraudulent Transactions during Holiday Shopping Weekend

“The holiday shopping season is a popular time for bad actors to engage in fraudulent activity, particularly in the e-commerce and retail industry,” said Samuel Tayengwa, head of product for TransUnion rest of Africa regions. “Online shopping is the new norm for most consumers and that trend has been further accelerated due to the COVID-19 pandemic. Consumers want to shop with online retailers that not only provide a seamless user experience, but also take consumer security and privacy seriously. It is imperative that those businesses equip themselves with the proper tools to detect fraud at the first warning sign without inhabiting the consumer journey.”

In addition to the above findings, TransUnion released the following fraud analysis for Kenya regarding the percentage of suspected fraudulent e-commerce transactions during the start of the holiday shopping season and entire year from 2019 to 2021.

• 3.6% from November 25-29, 2021; 3.8% so far in 2021
• 4.3% from November 26-30, 2020; 5.5% in 2020
• 7.6% from November 28-December 2, 2019; 7.7% in 2019

Percentage of Suspected Online Fraud – Holiday Season vs. Overall

TransUnion monitors digital fraud attempts reported by businesses in varied industries such as gambling, gaming, financial services, healthcare, insurance, retail, and travel and leisure, among others. The conclusions are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite – TransUnion TruValidate™.

To find out how this data varies by select countries, how mobile is playing a large part in digital holiday fraud, what days during the holiday shopping season are most popular for fraud and more, TransUnion’s holiday fraud trends can be found here

Problem is, while most Kenyan consumers know what a credit report is, far fewer understand how it influences their credit score and can help them access credit and achieve their financial goals, says Joseph Nyaga, acting chief executive at TransUnion Kenya. That’s why a vital part of the journey to financial health is maintaining and improving your financial health to get a good credit score.

“One of the best ways to improve your credit score is to avoid over indebtedness and maxing out your credit facilities. Check the credit limits on your loans, accounts, credit cards and overdrafts, and then see how much you owe on each of them. Make a plan to maintain a healthy amount of headroom in your lending facility and pay off as much of your outstanding balances as possible if you have the means: it will reflect on your score and ease the pressure on your finances,” said Nyaga.

Improving your credit score starts with checking your credit report. You can download your credit report for free once every 12 months from TransUnion and other credit bureaus in the country. You can also request a credit report or access your Credit Reference Bureau (CRB) clearance certificate through TransUnion’s Nipashe, which allows consumers to easily access their credit information through SMS. Your first clearance certificate is free.

Beware of scams, keep your finances secure

Importantly, you cannot improve your credit score and ‘clean-up’ your credit file by using so-called ‘credit repair’ services that promise you a fresh start for your credit history, warns Nyaga.

“Getting your credit back on track may seem tempting, but it’s actually a scam. Be very careful of so-called 'credit repair agents' who claim to be able to remove valid listings for an upfront fee. This practice is illegal, and you could end up losing your money,” said Nyaga. “One way to dispute inaccurate information on your TransUnion credit report is by emailing info@transunion.com.”

These scams often take the form of fake ads on a range of digital and social media channels. The ads may appear to come from TransUnion, saying that they will manage credit disputes on consumers’ behalf, or even clear their disputes and credit history. The ads use TransUnion’s web address, but the contact number is fictitious.

There are certain things TransUnion will never do when you’re accessing your credit report, says Nyaga.

• It will never ask you to share OTP numbers over the phone when accessing your Clearance Certificates.
• It will never handle disputes via social platforms or online classifieds. TransUnion’s official social media handles are https://www.facebook.com/TransUnionKenya/ and https://twitter.com/TU_Africa. It does not share information on any other social media platforms.
• TransUnion will never use phone numbers that are not listed on the www.transunionafrica.com website. Make sure you click through to the website to see the phone numbers that are listed on the ‘contact us’ page. If you’re unsure about the authenticity of a message from TransUnion, contact the company’s Kenya office on one of the following numbers: +254 742258478, +254 768617074, +254 768253748, +254 768262495, +254 706565285.
• TransUnion will never communicate via email on any domain name other than @transunion.com. Any webmail account, like Gmail, Hotmail, Yahoo or other web-based email, that claims to be from TransUnion, or acting on its behalf, should be ignored.

“We’ve seen a growing trend in recent years of consumers wanting to transact and take care of their finances online – and this has only accelerated through the pandemic. That’s why it’s more important than ever that we take basic precautions to stay safe, and get into good habits that help us take control of our financial futures,” said Nyaga.

To get a free copy of your credit report from TransUnion, simply SMS your name to 21272 and register at a cost of KES.50. You can then request your credit status at a charge of KES.19 per SMS. You can also mail info@transunion.com.

Ongoing consumer demand for credit saw the value of new loans disbursed during Q2 increase by 2.5% from Q1, from KES486.6 billion to KES499.0 billion. This was driven largely by growing demand for the MPESA Fuliza overdraft service, with 58.6% of the total accounts opened in Q2 being overdraft facilities – most likely due to families looking to subsidise living costs in challenging financial times, followed by mobile loans (39.4%) and personal loans (1.3%). Fuliza has grown by 142.8% in the 12 months since Q2 2020, from 3.7 million to 9.2 million in Q2 2021.

The newly released report shows a 12.3% drop in the number of active accounts* recorded in Q2 2021, to 18.4 million, down from 21.0 million in Q1 2021. The total number of active clients dropped by 2.1% (down to 9.8 million in Q2, from 10.0 million in Q1).

TransUnion Africa Product Director Samuel Tayengwa said banks and lending institutions had emerged as crucial players in Kenya’s recovery journey as they focused on customer needs to help them navigate the impacts of COVID-19. He said that the challenge for the credit industry is that financially stressed consumers were continuing to look for credit at a time that incomes were under pressure, which meant that the risk of non-payment is increased, resulting in non-performing loan (NPL) rates remaining high. According to the Central Bank of Kenya, the NPL rate stood at 14.0% at the end of June, compared to 14.2% in April 2021.^[1]

^{[1] Central Bank of Kenya’s ‘Monetary Policy Committee Meeting’ press release on June 28}

“Credit risk is the primary risk alongside fraud that risk lenders need to manage, especially at a time when credit defaults are expected to rise. Currently, lenders are struggling with NPL rates while trying to meet their customers’ needs,” said Tayengwa.

“Lending institutions will need to readjust their risk management thresholds for specific segments of their portfolio to curb rising NPL rates. Government and regulatory measures might help manage the situation, but ultimately, lenders need to be proactive in managing risk. Here, using trended data comes in handy to provide a more holistic picture of a consumer’s ability to manage financial commitments and determine appropriate risk levels.”

Kenya’s overall inflation rate remains a source of concern. The rate stood at 6.3% in June 2021, an increase of 37.7% over June 2020 (4.6%), driven by the high cost of food, non-alcoholic beverages, housing, water, electricity, gas and transport. While higher prices resulting from inflation drive increased demand for credit, this can also boost the number of less creditworthy borrowers who may eventually default on their payments. As inflation rates rise, so does the base lending rate, which affects consumer ability to pay loans.

An interesting trend to emerge from the report is that Gen Z (born between 1995-2012), which is newest to credit, has started asserting its presence up in the banking sector, accounting for 9.2% of accounts opened in Q2. The Savings and Credit Cooperative (SACCO) sector has a relatively higher credit uptake from the older generation, with Baby Boomers (born 1944-1964) accounting for 27.9% of the total accounts opened. Millennials (born 1980-1994) have higher relative representation in all sectors because of their sheer numbers in the credit market. They make up 44.9% of the total population, followed by Gen X (born 1965-1979) at 26.8%.

Fraud is an ongoing and increasing concern, especially with the growth in digitised banking solutions spurred on by consumer demand caused by pandemic-related lockdowns that impacted their ability to bank (and conduct retail transactions) in person. Annual losses from identity theft and loan stacking amount to approximately KES13.3 billion, which highlights the fact that Kenyan lenders need sophisticated solutions for identity verification and fraud prevention. TransUnion is bridging this gap for lenders through their recently-launched digital onboarding solution, said Tayengwa.

More information about the TransUnion Kenya Market Insights Report, including details about a variety of credit products, can be found here. It includes more information about balance and account status trends, including credit cards, personal loans, asset finance and mortgage loans.

Table 1: Overview of the formal lending market in Kenya, Q2 2021

* Active accounts are defined as facilities that form part of the outstanding portfolio and are reported in the balance sheet.

As lenders respond to, and recover, from the financial impact of the pandemic, managing the effects of COVID-19 on credit risk is now a top priority, says Samuel Tayengwa, director of product at TransUnion Kenya.

Lenders remain under pressure to restructure loans and offer tax holidays to beleaguered consumers. The impact of the recent extension^_[1] of the consumer loan repayment period is estimated by TransUnion to apply to around KSh 1.7 trillion, or 57% of the banking sector’s KSh 2.9 trillion consumer lending book.

At the same time, TransUnion’s credit data shows that non-performing loan rates in Kenya have increased to 14.6% in March 2021, from 12.5% in March 2020, as more borrowers are defaulting. Fraud remains an ongoing and increasing concern, with TransUnion data putting annual losses from identity theft and loan stacking in the country at approximately KES 13.3 billion.

With banks under continued pressure to grow revenue and increase market share amidst the backdrop of the pandemic, TransUnion recently announced the launch of TrendedView Report, a new enhanced consumer report that helps lenders understand a consumer’s credit behaviour and repayment patterns before and after the crisis hit to identify credit risk and lending opportunities.

“A credit score alone doesn’t give banks and financial institutions full context of a consumer’s financial position. It’s important to understand the customer journey in the context of economic and business trends. Insights on consumers’ credit scores and loan balances before and after the crisis, how their credit scores are trending, what loan products they have and what the credit limits are, can lead to better risk management and more informed lending decisions,” said Tayengwa.

TrendedView Report provides a more holistic picture of a consumer’s ability to manage financial commitments and determines appropriate risk levels, allowing lenders to know their share of wallet, improve risk decisions, set competitive credit limits and grow their customer bases.

It does this by classifying consumers based on their level of credit activity; showing a consumer’s credit score trend and probability of default; providing detailed information on current outstanding loans; and listing past credit repayments and identifying repayment trends.

“Access to credit is fundamental to a strong and growing economy. This capability will help consumers build financial security by getting access to responsible credit, while giving credit providers deeper insights into the risk behaviour of consumers to better serve them and advance them credit that can lead to a higher quality of life,” said Tayengwa.

^{[1] The Central Bank of Kenya has given bank borrowers an additional three months (March 3 to June 3) to regularise their loan repayments following the expiry of a one-year window in which lenders had extended and restructured loan repayments for customers adversely impacted by Covid-19 pandemic.}

^{https://www.centralbank.go.ke/uploads/banking_circulars/1400484618_Banking%20Circular%20No.%203%20of%202020%20-%20Implementation%20of%20Emergency%20Measures.pdf}

Molefe, the former executive director for South Africa & Rest of Africa for content and technology solutions provider LexisNexis, replaces Chad Reimers, who moves to a new position within TransUnion’s wider global business. Molefe will take responsibility for business development, stakeholder and regulatory engagement, and overall operations in seven countries in East and Southern Africa*.

Lee Naik, the chief executive officer of TransUnion Africa, said TransUnion’s wider Africa capability was ‘a critical part’ of the company’s portfolio growth strategy, and that he was looking forward to extending its offering under Molefe’s leadership.

“Thabo has extensive experience in growing markets across Africa and has a proven track record of high-level stakeholder engagement. We’re confident that he will be able to position TransUnion’s global information and insights capabilities to take our business to the next level in these key markets,” said Naik.

Molefe, who took up his new role on 24 August 2020, has deep knowledge of the African marketplace, having operated across the continent in a senior capacity for almost 20 years. He has previously fulfilled leadership roles at both LexisNexis and technology giant HP.

“TransUnion’s breadth and depth of data insights, and range of information solutions, are unmatched in this industry. I joined the company because I believe it has the potential to help even more African businesses make more informed decisions, and African consumers better manage their personal information and gain access to financial products and services,” said Molefe.

“I’m looking forward to deepening our relationships with clients, consumers and wider stakeholders, and helping the financial and digital lending communities establish trusted relationships and deliver great experiences and help create more economic opportunities.”

*_{Outside of South Africa, in East and Southern Africa TransUnion has operations in Kenya, Rwanda, Zambia, Namibia, Botswana, Eswatini, and Malawi.}

Cashless solutions like mobile lending and digital payments were already growing rapidly on the continent even before the pandemic struck. Now, we could see a scenario where the effects of COVID-19 on our society will create permanent changes in the way we use digital payments, cards and cash, creating both opportunities and challenges for financial institutions, said Billy Owino, CEO at TransUnion Kenya.

“Even in 2020, millions of people across sub-Saharan Africa still pay their bills and send money each month in cash – physically going to a retailer or a bank to make payment or to receive grant payments. Now, their safety concerns mean they don’t want to make physical payments anymore, which means banks and FinTechs will have to rapidly roll out safer, contact-free payment methods,” said Owino.

As markets prepare for life beyond the pandemic, digital transformation is becoming a key strategic initiative for financial institutions across both digital and traditional channels. Financial services providers will need to focus on offering payment and lending solutions including onboarding customers digitally in a seamless, easy and secure manner.

They are increasingly being supported by economic policy changes from regulators and national banks to further the national digitisation agendas. The Central Bank of Kenya has put in place a range of measures, including zero charges on money transfers for amounts Ksh.1,000 and below for individual transfers using mobile money wallets. bank transfer costs to mobile wallets have also been waivered by the regulator.

As growing numbers of consumers and businesses transact online, one of the biggest obstacles to the mass uptake of digital solutions will be security, says Owino. TransUnion’s quarterly analysis of global online fraud trends found that the percentage of suspected fraudulent digital transactions against businesses worldwide had decreased by 9% from the beginning of the pandemic to when businesses began reopening*. By contrast, TransUnion’s Consumer Financial Hardship surveys found consumers targeted by digital COVID-19 schemes had increased 10% in this time. So, while fraudsters might be targeting businesses less, they are going after the businesses’ customers more.

This will mean banks and businesses will need to deploy robust identity verification and fraud detection tools to manage their risks and avoid losses at a time when demand for credit is growing. At the same time, they must ensure a smooth customer experience that does not alienate the customer before they have even onboarded.

“Now that even more transactions have shifted online, fraudsters are trying to take advantage and companies must adapt. Lenders and businesses need to know exactly who they are dealing with, and how to protect their genuine customers from fraudulent activities. The businesses that come out on top will be those leveraging fraud prevention tools that provide great detection rates, and providing the ability to open accounts online in an easy, personalised way,” said Owino.

Rather than asking customers to manually enter their personal information, for example, ID documents can be validated online, and the information used to pre-fill an application. Once ID is established, the next step is effective ID authentication to detect and prevent fraud. Digital transactions carry an increased risk of fraud that businesses need to address through a multi-layered fraud strategy including assessing risk of digital signals like device, email, phone and behaviour.

After ID management and fraud risk and prevention steps are taken, the final steps in a seamless onboarding experience include assessing the consumer’s ability to pay, based on actual or estimated income and credit history.

“COVID-19 has put immense pressure on African financial institutions to transform digitally, and to do this, they will need access to the most comprehensive set of offline and online data assets. Providing a truly seamless onboarding process requires up-to-date data sourced from credible data sources like credit agencies, government agencies, telcos and utility providers. This is where information providers like TransUnion are playing an increasing role in driving digital transformation, access to credit and financial inclusion,” said Owino.

Continuous sharing of data in the market as a strategy to mitigate against fraud and risk management, will be of great importance going forward.

* _{Global research published 25 August 2020 – As Businesses Reopen Physical Locations, New TransUnion Research Shows Fraudsters Decrease Online Schemes Against Companies. Conversely, consumers targeted by digital COVID-19 fraud increased from early in the pandemic.}

That’s the warning from Billy Owino, CEO of TransUnion Kenya, who says financial institutions and businesses must deploy robust identity verification and fraud detection tools that do not hinder the customer experience to manage their risks and avoid losses at a time when demand for credit is growing. 

“Now that even more transactions have shifted online, fraudsters are trying to take advantage and companies must adapt. Businesses need to know exactly who they are dealing with, and how to protect their genuine customers from fraudulent activities. The companies that come out on top will be those leveraging fraud prevention tools that provide great detection rates and friction-right experiences for consumers,” said Owino.

TransUnion Kenya recently introduced two new solutions – ID Authentication and High Velocity Check – to enhance its flagship identity verification, consumer authentication and fraud prevention solution suite, IDVision® with iovation®. ID Authentication and High Velocity Check help specifically with the issues of identity fraud, synthetic identity fraud and loan stacking.

Synthetic identity fraud occurs when fraudsters create fictitious identities by piecing together real identity attributes and fake information with the intent to open fraudulent accounts. According to McKinsey, synthetic identity fraud is the fastest-growing type of financial crime[i]. Loan stacking can also cause significant challenges and losses for both financial institutions and consumers when fraudsters apply for and take out numerous loans at the same time using fake IDs.

^[i] _{https://www.mckinsey.com/business-functions/risk/our-insights/fighting-back-against-synthetic-identity-fraud#}

The ID Authentication service aims to prevent fraudsters from using false identities by checking additional details against the Home Affairs database as part of the identity verification process. The High Velocity Check solution flags multiple uses of a single ID within a certain period, allowing lenders to identify potential loan stacking early and do deeper checks before granting credit.

Owino said while the need for digital channels had increased exponentially, fraud has also evolved and become more sophisticated. “Early signs during the pandemic suggest we will see fraud continue to rise in the coming months,” he said.

According to TransUnion’s latest research, suspected fraudulent digital transactions rose 56% for transactions that originated in Kenya and 5% globally between the periods of January 1-March 10 and March 11-April 28. In this time, TransUnion identified more than 100 million suspected fraudulent transactions worldwide. It used March 11, 2020—the date the World Health Organization (WHO) declared the COVID-19 a global pandemic—as a base date for its analysis.

“Identity verification is no longer limited to a set of core documents and a few pieces of personal information. It is about understanding someone’s digital footprint, the devices they use and how they use them. Only by combining personal and digital data, can businesses truly protect their most valuable asset – their customers,” said Owino.

Shai Cohen, senior vice president of Global Fraud & Identity Solutions at TransUnion said while Africa is a global hot spot for the origination of online fraud, its digital economies are also advancing by leaps and bounds, and require innovative solutions to unique challenges.

“IDVision with iovation's insights from experience with over seven billion global devices allows businesses in Kenya to get an upper hand on fraudsters, while streamlining access for their genuine customers," said Cohen.

IDVision with iovation, which combines personal and digital data, makes trust possible between businesses and consumers. It provides an accurate and comprehensive picture of each person while delivering relevant, friction-right experiences to consumers by:

• Establishing Identity: Identity is verified against a broad set of personal and digital
• Authenticating Customers: IDVision with iovation secures each point of the customer journey with authentication methods tailored to the transaction risk level
• Preventing Fraud: It proactively identifies fraudulent transactions and behaviours of any given device in real time

The Kenyan credit market is coming under severe pressure as the COVID-19 pandemic impacts the Kenyan economy. According to the latest TransUnion Q1 2020 Kenya Market Analytics Report, the market is facing an increase in defaults and non-performing loans (NPLs), despite banks restructuring loans to help struggling individuals and businesses.

The report showed an increased demand for trade, mobile and personal loans in Q1 2020, with the total number of loan accounts increasing by 21%, from 108.2 million in Q4 2019 to 131.4 million in Q1 2020. This was likely due to a high demand after the festive season to fund items like school fees and boost business cashflows. Approximately 92% of accounts opened were mobile loans, with more than 40 mobile loan lenders active in the Kenyan market.

However, there was a sharp decline in new business loans, despite the repeal of the interest cap in November 2019, which opened many opportunities for funding both large businesses and small and medium-sized enterprises (SMEs) that had suffered from a cash flow shortage. Contrary to the expectation that the market would advance more loans following the repeal, TransUnion’s data showed just 27,000 new business loans in Q1 2020, down from 58,000 in Q4 2019.

Since Q4 2019, non-performing loan rates increased by 90 basis points (bps) for credit cards (at 12.6% in Q1 2020, up from 11.7% in the previous quarter), by 170 bps for mobile loans (9.5%, up from 7.8%), by 170 bps for mortgages (7.4%, up from 5.7%), and 280 bps for personal loans (17.4%, up from 14.6%). The current overall market NPL rate is 12.7%, according to the Central Bank of Kenya.

TransUnion Africa Product Director Samuel Tayengwa said while the Q1 2020 data did not reflect the impact of COVID-19, it provides a valuable pre-pandemic baseline point for the Kenyan credit market.

“With COVID-19 changing the economic and consumer landscape at pace, the Q1 2020 report provides a valuable benchmark for the last full quarter before the impacts of the pandemic start to be felt and understood. This will allow the market to truly evaluate the impact of the pandemic in future quarters. We’re likely to see a deterioration in the Q2 2020 data, reflecting the impact of COVID-19 on the credit market from April 2020,” he said.

The report showed that the banking sector and Sacco sector both have the highest number of performing accounts compared to non-performing accounts (93% of the total accounts for each sector is performing). In all, banks currently hold 70.4% of NPLs in the credit market, down from 92.7% in Q1 2016. Most non-performing accounts in the banking sector (around 8.3 million in Q1 2020) are mobile loans, which account for 75% of total bank accounts opened. NPLs are defined as those that are over 90 days past due.

FinTechs account for 26.7% of all NPLs in the market, up from an average of just 1.1% in Q1 2016. There’s a high rate of NPLs in this sector (38.6% by accounts). Mobile loans are prevalent among FinTech lenders, making them more susceptible to fraud. In addition, structured recovery plans are uncommon in this sector.

Tayengwa said government measures to cushion the economy against the aftermath of COVID-19 would help unlock disposable income and ease indebtedness for some, or create an opportunity for loan top-ups, upselling and the acquisition of new credit facilities. These measures include 100% tax relief for people earning up to KES 24,000. “In addition, it is anticipated the repeal of interest rate caps will increase the demand for personal loans, as lending institutions will no longer be as stringent or risk averse and will be more able to price for higher risk consumers,” said Tayengwa.

More information about the TransUnion Kenya Market Insights Report, including details about a variety of credit products, can be found here. It includes more information about balance and delinquency trends, including for credit cards, personal loans, asset finance and mortgage loans.

Table 1: Overview of the formal lending market in Kenya, Q1 2020³

^{Source: TransUnion}

According to TransUnion’s research, consumer debt balances grew in 2019 as growing numbers of consumers turned to unsecured credit to cover everyday expenses. Delinquencies also increased, with the biggest concern being personal loans, which showed a 77.7% rise in the delinquency rate over the previous year. The COVID-19 crisis will only exacerbate the situation as many people are struggling to make repayments on their debts.

Billy Owino, chief executive officer at TransUnion, says it’s important that consumers manage their credit even more carefully than usual through the COVID-19 pandemic, and beyond.

Protect your credit score

It’s vital to protect your credit score during tough times, because access to credit can often help you get through the rough patches. As income streams shrink in the coming months, people may find themselves having to use their credit cards more, or even dip into their home loans. The important thing is to pay all your bills on time if you can, says Owino: paying on time is the biggest factor that affects your credit score.

The Central Bank of Kenya’s revised Credit Reference Bureau (CRB) regulations will bring some measure of relief to consumers. The new regulations, which were gazetted last month, will see consumers who had previously been blacklisted for non-performing loans of less than Ksh.1,000 delisted. This will help consumers to start building their score in the right direction. The regulations also provide for free first-time clearance certificates, which will help the youth and those seeking formal employment for the first time save money.

Talk to your lenders

If money is tight and you’re worried you’re going to miss a payment or two, it’s best to contact your lender before the payment is due. You can explain your situation and ask whether they can offer any assistance.

Consider contacting your bank or credit card issuer if you’re affected by the COVID-19 pandemic. You may qualify for some leeway. Several Kenyan banks have already announced payment holidays to help consumers and small businesses get through this time.

Stay in control of your credit health

It’s important to check your credit report to make sure all your account information is correct. Consumers can access their credit reports through TransUnion’s Nipashe, which is available on the Google Playstore. Nipashe gives consumers an instant view of their credit standing, and they can request a credit report (which is also free once a year) for more information. If an institution has given them an adverse listing, they can work towards clearing it, or if there is a conflict, TransUnion will be able to assist them to resolve it. To use Nipashe, consumers simply SMS their name to 21272. They can then request their credit status.

“We know many people are feeling anxious about their finances during this challenging time. Organising your credit information and maintaining communication with your lenders are two ways you can help stay in control of your credit health during times of uncertainty,” says Owino.

Past crises and initial data suggest there will be ‘a significant reduction’ in the quality and volume of credit in Kenya as consumers and businesses grapple with lower income. What will define the COVID-19 pandemic for the consumer credit market is how banks and lenders respond to the challenges it presents, said Billy Owino, CEO of TransUnion Kenya.

To help the consumer credit market respond to the crisis, TransUnion this morning launched its COVID-19 playbook via webinar to a wide audience of Kenyan business and credit industry players. The playbook is an insights-driven methodology designed to help the credit market navigate a consumer marketplace that will be heavily impacted by the pandemic, and includes several market scenarios for the industry to consider.

“During times of crisis, when events are sudden and consumer incomes are impacted, demand for credit increases while supply decreases. Credit will be an important form of liquidity for struggling consumers, and having the right treatment strategies in place to predict and manage potential outcomes is what will set successful organisations apart. We know lenders want to help the consumers they serve, but they need to do it based on well-informed and robust solutions and analysis,” said Owino.

The playbook combines key macroeconomic indicators, historical trends and insights garnered from other crises around the globe, such as Hurricane Katrina and Hong Kong’s handling of the SARS and COVID-19, to generate multiple data-driven market scenarios and projections of new business activity, and provide treatment strategies for each scenario to mitigate risk.

Prior to the COVID-19 crisis, Kenya’s economy was projected to grow 5% in 2020, based on projections by the World Bank. However, this has since been reviewed downward to between 1.8-2% GDP growth. On the consumer credit front, TransUnion research shows that unsecured products recorded high balance growth in 2019. During the period, personal loans also showed a 77.7% rise in the serious delinquency rate over the previous year. This trend will only be exacerbated by the COVID-19 crisis, and lenders will have to shift their strategies to cope, said Owino.

“Our data-driven analysis indicates three possible scenarios that will influence the financial services industry: best, medium and worst case. To mitigate this, businesses should be thinking of their response to the COVID-19 pandemic in three phases: getting organised and mitigating the downside; prioritising post-COVID robustness; and getting out of the blocks first and having a fast recovery,” he said.

Financial services providers interested in learning more about the COVID-19 playbook can click here for the on-demand presentation