Digital lender Tala has laid off 28 employees from its customer operations team, citing a reduced workload due to fewer loan defaults and a drop in customer support queries. According to an internal memo seen by TechCabal, the layoffs were necessitated by a shift in how customers repay their loans.

The layoffs are part of a larger restructuring plan initially outlined in an internal memo in February 2025, which proposed cutting 55 roles across Tala's recovery and customer service teams. However, the company later revised the figure to 28 in April as it reassessed its operational shifts and efficiency measures.

Tala attributed the layoffs to changes in borrower behavior, stating that customers are successfully choosing and managing their loan repayment timelines according to their income cycles. This shift has led to a decrease in loan defaults and customer support queries, making 28 positions in the customer operations team redundant.

The layoffs affect 3% of Tala's workforce, suggesting the company employs nearly 1,000 people. Tala has committed to honoring all dues for affected staff, including their final salary, one month's pay in lieu of notice, a severance package of at least 15 days per year worked, and unused leave. Employees will also receive a one-time ex gratia payment and certificates of service.

The layoffs hint at broader changes in the digital lending space in Kenya. With the economy under pressure, many consumers may be borrowing less or avoiding new debt altogether. This shift in behavior could be attributed to the increasing competition in the digital lending space, where standalone lenders like Tala face challenges in attracting users and competing with M-Pesa-linked services like M-Shwari, Fuliza, and KCB-Mpesa, which offer seamless integration and brand trust.

As of 2023, M-Shwari (34%), Fuliza (25%), and KCB M-PESA (15%) led the Kenyan digital lending space, while Tala held a 13% market share, just ahead of Branch at 9%. The layoffs may indicate Tala's efforts to adapt to the changing market dynamics and optimize its operations to remain competitive.

Tala did not immediately respond to a request for comment. The company's restructuring efforts and layoffs may be a sign of the digital lending space's ongoing evolution, as lenders adapt to changing consumer behavior and market conditions.

The implications of Tala's layoffs extend beyond the company itself, as they may signal a broader shift in the digital lending landscape. As the space continues to evolve, lenders will need to innovate and adapt to changing consumer needs and preferences to remain competitive. The layoffs may also have implications for the broader fintech industry, as companies navigate the challenges of scaling and optimizing their operations in a rapidly changing market.