SACCOs face strain as digital transactions expose system gaps
By Alvin Mwangi, March 24, 2026Kenya’s cooperative lenders are under growing regulatory pressure as surging digital transactions expose weaknesses in their payment systems, according to BPC East Africa Country Manager Prashant Byndoor.
Byndoor said the rapid growth of real-time payments is testing the ability of banks and SACCOs to keep systems stable, transparent and compliant.
“Rising transaction volumes, tighter regulation and growing competition are placing new demands on banks and cooperative lenders,” he said.
He noted that real-time payment systems across Africa are now processing about 64 billion transactions with flows nearing Ksh259 ($2) trillion.
In Kenya, SACCOs – holding over Ksh1 trillion in assets and serving more than seven million members – are increasingly central to everyday payments, including salaries, business transactions and bill payments.
However, many institutions still operate fragmented systems across core banking platforms, mobile apps and agent networks, making it harder to track and reconcile transactions.
Stricter oversight, rising risks
Byndoor warned that under stricter oversight, such gaps could heighten risks.
“Failed transactions, slow reversals or unclear records can quickly raise concerns about governance and weaken customer trust,” he said.
He added that regulators are pushing lenders to improve transaction tracking, reporting and risk management through more integrated systems.
With fintech firms offering faster and more seamless services, competition is also intensifying, especially as customer expectations shift toward instant and reliable digital payments.
Byndoor said investing in interoperable platforms that provide real-time visibility will be key for institutions to manage risks, meet regulatory requirements and remain competitive.
SACCOs balancing risk, lending pressure
The push for SACCOs to improve transaction tracking and risk management comes amid broader pressure on the sector to balance member welfare and financial stability.
Earlier this year, Kenyans and government officials urged SACCOs to lower lending rates to single digits to boost economic well-being, highlighting the challenge of maintaining affordable credit while safeguarding member savings.
With SACCOs holding over Ksh1.4 trillion in deposits, gaps in digital payment systems could exacerbate risks, especially as failed transactions or unclear records threaten both governance and customer trust.
Strengthening systems is now seen as essential to meet regulatory expectations, remain competitive against fintech players, and ensure that reforms – like lower lending rates – do not compromise operational stability.