Fintech’s Nigerian startup Kuda, a digital-only retail bank, has raised $ 1.6 million in pre-seed funds.
The company based in Lagos and London recently launched the beta version of its online mobile financing platform. Kuda also received his banking license from the Central Bank of Nigeria, giving him a distinction compared to other fintech startups.
“Kuda is the first digital-only bank in Nigeria with an independent license. We are not a mobile wallet or just a mobile application that is carrying an existing bank”, Kuda Bank founder Babs Ogundeyi told TechCrunch.
“We have created our own full-stack banking software from scratch. We can also take deposits and connect directly to the switch, “Ogundeyi added, referring to the central switch of Nigeria, a SWIFT-type system that facilitates bank communication and payments.
A representative of the Central Bank of Nigeria (speaking in the background) confirmed Kuda’s license and banking status and told TechCrunch: “As far as I know, there is no other digital bank [in Nigeria] that has a microfinance license”.
Kuda offers checking accounts without monthly charges, a free debit card and plans to offer consumer savings options and P2P payments on its platform in the coming months.
The efficiency of Kuda
“You can open a bank account in five minutes, do all the KYC in the application and you will be issued a new bank account number”, according to Ogundeyi. Ogundeyi, a recurring founder who left the Motortradertrader.ng ad site and worked as a financial advisor to the Nigerian government, co-founded Kuda in 2018 with former Stanbic Bank software developer Musty Mustapha.
The two convinced investor Haresh Aswani to lead the pre-issuance financing of $ 1.6 million, along with Ragnar Meitern and other angel investors. Aswani confirmed his investment to TechCrunch and that he will take a position in the Kuda board.
Kuda plans to use its initial funds to move from the beta version to the live launch in Nigeria for the fourth quarter of 2019. The startup will also develop the technology of its banking platform, including support for its developer team located in Lagos and Ciudad del Cabo, according to Ogundeyi
Kuda: past, present and future
Kuda also intends to expand in the near future. “It’s Nigeria for now, but the plan is to build a digital-only pan-African bank”, he said.
As of 2014, Nigeria has maintained the double distinction as the largest economy in Africa and the most populous country (with 190 million people).
To scale there and add a physical infrastructure to its online model, Kuda has correspondent relationships with three of Nigeria’s largest financial institutions: GTBank, Access Bank and Zenith Bank.
He clarified that banks are partners and not investors. Kuda customers can use the branches and ATMs of these banks to deposit money into bank accounts or withdraw funds free of charge.
“Although we don’t have a single branch, we actually have the largest branch network in the country”, said Ogundeyi.
Kuda’s plans to generate revenue are mainly focused on leveraging his bank balances. “We plan to match different kinds of responsibility with the different kinds of assets we create. That’s how we make money, that’s how we get efficiency in terms of income, “said Ogundeyi.
In Nigeria, Kuda enters a potentially income-rich market, but it is one that already hosts a crowded fintech field, as the country becomes the zero zone for new payment companies and technology investment in Africa.
In both gross and per capita figures, Nigeria has been slower in converting to digital payments than major African countries, such as Kenya, according to a joint analysis of the McKinsey Company and Gates Foundation conducted several years ago. The same study estimated that there could be about $ 1.3 billion in revenue if Nigeria could reach the same digital payment penetration as Kenya.
A series of new companies, established and new, look for that award in the West African country, several with a strategy to climb in Nigeria first before expanding to the mainland and worldwide.
Free payment company based in San Francisco Chipper Cash Entered Nigeria this month.
Nigerian B-series payment company Paga raised $ 10 million in 2018 to further increase its customer base (which now totals 13 million) and expand to Asia and Latin America.
Kuda CEO Babs Ogundeyi believes that the startup can scale and compete in Nigeria on several factors, one of them being financial security. Name the official bank status of the company and the security of the Deposit Insurance Corporation of Nigeria that brings something that can attract bank customers with cash to digital finance.
Ogundeyi also points out the offers and the price. “We seek to be the next generation bank where I can do everything, savings, payments and transfers, and also the least expensive one”, he said.
Also published on Medium.