How AI-driven innovation is transforming lives in Western

In an era of unprecedented change in the financial sector, lending institutions are being urged to embrace digital technologies to remain competitive and meet the needs of underserved entrepreneurs.

The influx of digital lending apps has disrupted traditional players, such as banks and established lending institutions, pushing them to modernise their processes to keep pace.

One notable player embracing this shift is Demulla, a fintech company based in Busia. The company has recently integrated Artificial Intelligence (AI) into its lending processes, marking a significant step toward more efficient and tailored financial services.

The innovative approach is a testament to how technology can drive inclusion and accessibility, particularly for entrepreneurs in underserved communities who are often overlooked by conventional banking systems.

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Born in 2017 from the simple need to empower local vegetable sellers in Busia County, the Kenyan-based fintech startup has blossomed into a powerful force, transforming the lives of thousands of micro-entrepreneurs across the Western region.

In an interview with The Standard, the firm’s spokesperson Patricia Nalyanya said Demulla aimed to empower startups and small businesses, especially vegetable sellers who were mostly excluded by traditional banks requiring collateral and high interests.

"We give loans as low as Sh3000 to anyone with a permanent structure where they have operated for at least one year," said Nalyanya.

According to her, in its early days, the firm was defined by a singular mission: to help small traders purchase fresh stock and sustain their livelihoods.

Unlike banks that demanded collateral and extensive paperwork, Nalyanya said Demulla offered a simple and accessible solution.

Recognising fintech's potential to transform lives, the firm began to invest in cutting-edge technology, laying the groundwork for its meteoric rise.

Today, it stands as a beacon of innovation, leveraging artificial intelligence (AI) to empower thousands of entrepreneurs across the Western region.

By 2020, its loan portfolio had reached Sh1 million, a lifeline for grocers, tailors, and boda boda operators who struggled to secure funding elsewhere.

Nalyanya said Kenya’s fintech ecosystem spurred by innovations like Mpesa created fertile ground for the firm to thrive.

Peter Wachira, a mali mali trader, is one such success story.

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Starting with limited resources, Wachira said he used Demulla’s loans and training to expand his business turning a small stall into a thriving shop that employs three people.

“Demulla’s support gave me the tools to grow my business and create employment opportunities for others,” he said.

He notes that his loan limits have grown over the years allowing him to borrow more and more hence expanding his business and opening brunches.

"I started with a Sh5,000 loan which has grown to over Sh50,000," said Wachira.

Alice Wakhungu, a kiosk owner in Kakamega town, shared his sentiments. She said she struggled to get loans due to the complex processes and high interest rates offered by banks.

She applied for a loan under ‘Soko Huru’ products at Demulla which offered a simpler solution, helping her expand her stock and attract more customers.

"Demulla has been a blessing to my business. The loaning and assessment process was easy, and the support I got made a big difference, their interests are friendly making it easy to manage servicing the loan while running a business," Wakhungu said.

According to Nalyanya, by integrating AI-driven systems, the firm revolutionised its loan approval process, enabling near-instant approvals while minimising risks.

"The AI-powered system uses advanced analytics to evaluate creditworthiness, assess market trends, and customize loan products to meet clients’ needs. This data-driven approach ensures that even first-time borrowers with no financial history can access credit, democratizing opportunities for Kenya’s underserved communities," she explained.

Nalyanya said AI allows the firm to go beyond traditional banking models, a technology that has streamlined operations while fostering trust and transparency.

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“Our innovation is not limited to AI. We pair financial services with comprehensive training programs that teach clients skills in bookkeeping, customer service, and even digital marketing. This holistic approach has helped small businesses transition from subsistence operations to sustainable enterprises,” she said.

By 2021, the firm’s portfolio had soared to Sh115 million, with active clients increasing from 89 to over 12,000. Despite this rapid growth, Demulla boasts an 89 per cent client retention rate.

From the initial three branches, the firm operates 27 locations across western Kenya, including Kisumu, Bungoma, and Kericho.

Nalyanya said the firm’s future is deeply rooted in technology with plans to enhance its AI systems to further refine risk assessments, personalise client experiences and predict emerging market trends.

“By integrating mobile bookkeeping apps and digital marketing tools into our services, we aim to equip entrepreneurs with the skills needed to compete in an increasingly digital economy,” she said adding, "By 2028, we envision expanding beyond western Kenya, ensuring that every entrepreneur in the country has access to capital and training.”