Kenya's digital banking landscape is undergoing a significant transformation, led by NCBA Loop, a pioneering digital bank that has pivoted towards a broader financial infrastructure model. Launched in 2017, Loop is now embedding credit and payments directly into transactions, removing the traditional separation between lending and payments.

This evolution aligns with the global shift towards embedded finance, where banking services integrate into everyday commercial activities rather than existing as separate processes. Loop's new model enables users to take loans and buy items in the same transaction, mirroring the success of Safaricom's M-PESA overdraft facility, Fuliza, and the growing Buy Now, Pay Later (BNPL) trend in Kenya.

According to Eric Muriuki, CEO of Loop, the company is developing solutions and observing trends both locally and globally. "We are both developing our solutions and observing trends here at home and in other parts of the world that we consider relevant," Muriuki said in an interview with TechCabal. This approach has enabled Loop to stay ahead of the competition, particularly in a market that has grown increasingly crowded with well-funded competitors like Ecobank-backed Fingo, Branch MFB, Umba, and Payless.

Loop's shift towards embedded finance is not only a response to competitive pressures but also a strategic move to expand beyond digital banking into a payments and credit infrastructure model. "Payments and credit will not be two different businesses, particularly short-term credit, because short-term credit is typically used to pay for something," Muriuki explained. "You see a bit more embedding of credit into payment journeys."

The benefits of embedded finance extend beyond individual consumers to businesses, particularly in trade and commerce. "If you want to pay a supplier in China for imported goods, that payment transaction can have a credit structure embedded into it," Muriuki added. This integration of credit and payments can significantly simplify and streamline commercial transactions.

The trend towards embedded finance is not unique to Kenya, with APIs and improved internet access enabling the creation of sector-specific financial solutions in agriculture, healthcare, and education. "You'll see more language like financial infrastructure," Muriuki said. "I could be an agri-tech company integrating technology into agriculture, but I then use financial infrastructure as a service, plugged into my agri-tech solution. That technology helps me register farmers, issue fertiliser, and distribute seeds—but the payments and credit linked to those transactions are services I consume from a financial infrastructure provider."

The future of neobanking in Kenya looks promising, with Muriuki predicting that while the distinction between neobanks and traditional banks will persist, the boundary will become thinner. Digital platforms will continue gaining market share in consumer banking, especially among a new generation of digitally native customers. Unlike older customers who transitioned from traditional banking to digital services, these users begin their financial journey in the digital space, interacting with multiple financial service providers through apps rather than maintaining a relationship with a single bank.

For corporate clients, embedded finance will reshape value chains. Businesses will still maintain relationships with traditional banks, but their financial operations will be deeply integrated with digital platforms. However, regulatory constraints—particularly around deposit protection—will ensure that banks remain a central part of the financial system, even as fintech-driven solutions distribute capital more efficiently.

Loop's transformation highlights the broader direction of Kenya's financial sector. As embedded finance gains traction, the role of banks is shifting—from standalone service providers to integrated financial infrastructure powering digital commerce. This shift has significant implications for the future of banking, commerce, and entrepreneurship in Kenya, and NCBA Loop is at the forefront of this revolution.