The Co-operative Bank of Kenya (Co-op Bank) has joined the fast-growing digital lending market with the launch of a new mobile overdraft facility, intensifying competition with industry heavyweights Equity Bank and Safaricom.
The new product, dubbed “Kamilisha”, allows customers to access instant unsecured overdrafts of up to KSh 100,000, enabling them to complete transactions even when their account balances are insufficient. The facility targets both individuals and small businesses seeking short-term liquidity for bills, rent, stock purchases, or emergencies.
“The overdraft service allows customers to bridge temporary cash shortfalls and complete important transactions instantly,” the bank said in a statement.
Co-op Bank’s entry into the digital overdraft space marks a bold step into a sector long dominated by Safaricom’s M-Shwari and Fuliza platforms and Equity Bank’s Eazzy Overdraft. These products have transformed Kenya’s credit landscape, offering millions of Kenyans quick access to short-term loans via mobile phones.
Analysts say Co-op Bank’s move signals its ambition to tap into the country’s expanding digital credit market, where instant mobile-based borrowing has become a key financial lifeline.
“This is a natural progression for Co-op Bank as it deepens its digital banking capabilities and competes for the growing tech-savvy customer base,” said a Nairobi-based financial analyst.
The Kamilisha overdraft is linked directly to customers’ transactional accounts. Eligibility is determined by account activity and credit history, ensuring that responsible users can enjoy fast approvals without the paperwork associated with traditional loans.
While Co-op Bank has not disclosed the specific interest rates, it is expected to offer competitive pricing to attract users away from Safaricom’s Fuliza, which has faced criticism for its high daily fees.
The rise of digital overdrafts underscores how Kenyan banks and telecoms are racing to blend technology with traditional finance. With over 70% of financial transactions now conducted digitally, institutions are under pressure to innovate or risk losing customers to fintech-driven competitors.
For Co-op Bank, which serves over 9 million customers through its agency and mobile platforms, the new offering is part of a wider strategy to enhance convenience and customer retention.
For consumers, the surge in digital overdrafts brings greater access to instant credit—but also new challenges. Financial experts warn that easy borrowing can encourage dependency and lead to higher default risks if users fail to manage repayments.
“Digital overdrafts are convenient, but customers must understand the costs involved,” cautioned an economist. “The convenience should not come at the expense of financial discipline.”
With Co-op Bank’s entry, Kenya’s digital credit race is set to heat up. As competition intensifies, customers can expect better terms, more flexible products, and a shift toward responsible digital lending practices.
If Co-op Bank succeeds in balancing affordability with innovation, it could carve out a significant share of a market once dominated by Safaricom and Equity—cementing its place as a digital-era banking leader.
