Left at the Altar

Hey👋🏽 Mercy here,

Welcome to a new edition of The Big Bank Theory.

And a big thank you to all the new subscribers since the last one.

I’ve always believed legacy finance, telcos, and fintechs shouldn’t be at war.

The real opportunity is in collaboration, not competition.

But as we’re starting to see, these partnerships come with friction, and sometimes, real fallout.

This week, we’re digging into a messy break up in Kenya’s finance scene.

Grab a seat.

On December 3rd, 2024, an angry letter landed on Safaricom’s legal desk.

The sender was Genghis Capital, once a trusted partner, but now a public enemy.

The accusation: Business fraud.

In 2019, the telco and investment bank had teamed up to launch Mali, a Money Market Fund designed to sit inside M-Pesa.

It gave everyday users a way to invest as little as KES 100 and earn interest daily.

And for many, it was their first step into regulated finance.

Genghis supplied the license, Safaricom owned the rails, and the revenue would be split.

The potential was huge, and quietly, Mali grew.

By 2024:

• The CMA ranked Mali Kenya’s 17th largest collective investment scheme

• Mali served over 700,000 customers

• And it managed KSh 3.1 billion+ in assets

The next step was simple: take it out of pilot mode and roll out officially.

Then everything changed.

New Funds, New Partners, No Genghis

A week before that letter, the Capital Markets Authority approved a different fund, Zidii, also under Safaricom’s name.

But this time, Genghis wasn’t in the picture.

Safaricom had brought on new partners: Standard Investment Bank, ALA Capital Limited, and Sanlam Investments East Africa Limited

Together, they would manage the fund and oversee how the deposits were invested.

Safaricom claimed that Genghis’s tech infrastructure was too fragile to scale, and that “it was necessary to create Ziidi to provide customers a stable alternative.”

But from where Genghis sat, it was a betrayal.

To add to the fraud allegations, the firm also accused Safaricom of breaching privacy law.

Allegedly, the telco had quietly migrated Mali users into Zidii through the M-Pesa app, without consent.

And if true, it would be a direct violation of Kenya’s Data Protection Act.

The allegations triggered a very public fallout, one that revealed much more than a broken partnership.

Distribution is the New King

For a long time, power in finance sat with the ones with the deepest pockets.

Think banks, insurers, and investment firms like Genghis.

They held large capital reserves, the regulatory clout, and the clients that mattered : Big corporates and the ultra-wealthy.

And that shaped everything:

• Products were complex and exclusive

• Access was slow and selective

• Retail customers came second. Maybe third

But technology is challenging that hierarchy.

Today, distribution and access are becoming just as powerful as capital. Maybe even more.

China’s Alipay, operated by Ant Group, provides a working blueprint.

Alipay now serves over 1.3 billion users and 80 million merchants.

And inside the app, you can make payments, borrow money, buy insurance, and invest in funds, all in a few taps.

It’s a full-service financial platform that’s moving more money than some Chinese banks.

And the same dynamic is playing out in Kenya.

In 2024, NCBA Bank, Kenya’s third largest bank by assets, disbursed over KES 1 trillion ($7.7 billion) in digital loans.

But most of that lending didn’t happen on NCBA’s own rails.

It happened on M-Pesa, Safaricom’s mobile money platform.

• Ksh. 906 billion ($7 billion) flowed through Fuliza, a short-term overdraft product.

• Ksh. 98 billion $758.4 million came from M-Shwari, a mobile savings and loan service.

NCBA may have put up the capital and taken on the risk, but Safaricom is the face the customer sees.

They sit in every pocket, on every handset, interacting with millions of users multiple times a day.

And that setup puts NCBA in a tricky spot.

If the relationship with Safaricom ever sours, or if Safaricom brings in another banking partner, NCBA could lose access to millions of borrowers almost overnight.

And the bigger issue?

They’d lose them without ever truly owning the relationship in the first place.

Because if you don’t control the platform, you don’t control the relationship.

CMA, Your Move

Over the past five years, the Capital Markets Authority has done the hard work, clearing the path for the current retail investing boom.

It sped up fund licensing.

It opened the door to mobile-first products.

And it launched a regulatory sandbox that let products like Mali test the waters without going through years of red tape.

Last year, the combined assets under management in Collective Investment Schemes, including Money Market Funds and fixed income funds, crossed KES 300 billion for the first time.

Products like Mali showed what’s possible when regulators back innovation early.

But here’s the problem: the market evolved, but did the rules evolve with it?

Genghis accused Safaricom of moving users from its Zidii fund to Mali without clear consent, possibly violating Kenya’s Data Protection Act.

Both funds were approved by the CMA.

But when the dust kicked up, the regulator went mum.

And it raises a critical question: Is the current regulatory model built built for the world we’re in now, where telcos and fintechs run the front end of finance?

Because while the CMA regulates funds and platforms, like Mali or Ziidi, that oversight traditionally focuses on licensing, disclosures, and product marketing.

Yet today, platforms control user onboarding, interface design, and data flows, areas where significant power and risk reside.

It’s platforms that control how people sign up, what they see, and how money moves.

More partnerships mean more data-sharing, which could mean more turf wars in the future.

Here’s how it could step up:

• Hold platforms to the same standards as fund managers, especially on user consent and switching

• Co-regulate with the Data Commissioner, so privacy and market conduct aren’t handled in silos.

• Borrow from global examples - like India’s SEBI, which now vets how apps steer investors, or Nigeria’s SEC, which requires clear opt-ins from customers on digital products.

A question for you: If you don’t control the product or the platform, can you really claim the customer?

Reply and let me know what you think or drop me a comment on LinkedIn.

See you in the next one.