Banking-as-a-Service (BaaS) and embedded finance enabler Ukheshe has announced a partnership with Diamond Trust Bank (DTB) to provide a BaaS platform in East Africa. BaaS, which entails the provision of banking products and services through third-party distributors, is expected to increase at a compound annual growth rate (CAGR) of 25% in several markets, and the collaboration is set to see both parties get ahead of the rapid growth curve.

Banking-as-a-Service and Ukheshe – Diamond Trust Bank partnership details Mark Dankworth, President of Business Development at Ukheshe Africa said that the company is looking forward to partnering with DTB as a progressive bank with a common vision for BaaS, as it has been on the lookout for a banking partner in the region. As DTB seeks to be a tech company with a banking licence, the companies' collaboration will enable the enterprise to launch innovative ventures within the East African market. This market has a digital payment landscape that is currently dominated by mobile network operators (MNOs) and presents a multitude of regulatory challenges to new players, despite banks being well-supported by regulators.

BaaS collaborations, such as the Ukheshe – Diamond Trust Bank one, are believed to be the appropriate solution for both parties, as they enable banks and fintechs to take on the dominant MNOs while simultaneously meeting all regulatory requirements, as stated by the spokesperson. Jamie Loden, Chief Operating Officer at DTB added that the market is prepared for new offers, stating that consumers are becoming increasingly aware of the options in the market and are beginning to favour convenience over cost, which is thought to create new opportunities for agile BaaS models. As per the information detailed in the announcement, Ukheshe has leveraged the Eclipse platform to develop Wallets as a Service as part of the Astra platform, which was launched by DTB in Kenya, with further launches planned for 2024 in Uganda and Tanzania.

This is set to enable fintechs, edtechs, and other technology-enabled entities in these regions to work freely with a sponsoring bank, facilitate regulatory approval, and be provided with access to multiple payment products through an API orchestration layer. The products include wallets and a wallet management system, QR payments, payment services, SME solutions, SoftPOS, digital KYC, and virtual and physical cards, among other curated digital financial services. Loden believes the partnership to be a collaborative way for DTB and Ukheshe alike to achieve their organisational strategic goals from a customer acquisition, value packaging, support, and management perspective.

DTB is to leverage Ukheshe’s technology to further innovation, better financial services distribution, and provide services to its customers, whereas Ukheshe is to use the bank’s position to be able to operate within the market. Dankworth added that this is in alignment with Ukheshe’s vision for its future, stating that the partnership will enable the company to meet regulatory requirements for new market expansion, especially in East Africa while helping the bank grow its customer base quickly and onboard fintech partners on the Astra platform.  In the bigger scheme, the partnership is to help drive innovation and growth, creating the ground for fintechs to onboard, develop, and grow advanced solutions, as well as overcome regulatory difficulties. Furthering digital banking services in this way helps replace physical cash usage, bettering financial inclusion for end users and the market at large.

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