Old Mutual has injected an additional Sh1.2 billion into its subsidiary Faulu Microfinance Bank as the lender steps up investments in technology, including its core banking system, to defend its market leadership.

The fresh capital comes as Faulu prepares to roll out an upgraded core banking system next week, aimed at improving service delivery and creating a stronger platform for future digital innovations.

The latest capital injection signals Old Mutual’s continued commitment to Faulu’s expansion ambition, with the shareholder seeking to strengthen the bank’s ability to compete in Kenya’s increasingly digital financial services market.

The micro-lender closed December last year with Sh1.33 billion core capital against the required minimum of Sh60 million.

Old Mutual acquired a majority stake in Faulu in 2015, giving it a 60.66 percent shareholding in the micro-insurer, which is the largest in the country with a market share of 35.7 percent, followed by Kenya Women Finance Trust (12.1 percent) as at the end of 2024.

Faulu has struggled with profitability, having gone for six years without a profit since Sh387.54 million posted in 2019. The micro-financier has, however, narrowed losses for the past two years, moving from the peak net loss of Sh1.42 billion in 2023 to Sh1 billion in 2024 and Sh496.36 million last year.

Old Mutual Group chief executive Arthur Oginga said the additional investment demonstrates the group’s confidence in Faulu’s strategy and long-term prospects.

“Our additional investment in Faulu Bank reflects our confidence in the bank’s strategic direction and long-term growth,” said Mr Oginga.

“The Sh1.2 billion capital injection strengthens Faulu’s ability to accelerate its transformation agenda, expand support to micro, small, and medium-sized enterprises and continue investing in digital capabilities that enhance customer experience and support sustainable growth.”

The investment comes at a time when financial institutions are increasingly turning to technology to improve customer experience, reduce operational inefficiencies and widen access to financial services.

Faulu Microfinance Bank chief executive Julius Ouma said the new system reflects the lender’s continued investment in building a customer-focused institution. He added that the upgraded core banking platform will give Faulu increased flexibility to scale its services.

“This upgrade strengthens our ability to serve them better today while giving us greater capacity to innovate for the future. It is an important step in our journey to deliver a banking experience that keeps pace with the evolving customers and business needs,” said Ouma.

The bank is moving to deploy automated loan origination systems alongside configurable approval routing and strict disbursement controls.

The bank, which has traditionally focused on microfinance and underserved segments, is also seeking to strengthen its role in financing MSMEs, which is a big segment of Kenya’s economy and employment.

Faulu was founded in 1991 by Food for the Hungry International (FHI), a Christian relief organization, as a loan scheme programme that targeted low-income earners in Nairobi’s Mathare slum. In May 2009, it became the first registered deposit-taking microfinance bank in Kenya under the Micro-Finance Act.

palushula@ke.nationmedia.com