Nigerian fintech startup Kuda — a digital-only retail bank — has raised $1.6 million in pre-seed funding.
The Lagos and London-primarily based organization lately launched the beta version of its on the net mobile finance platform. Kuda also received its banking license from the Nigerian Central Bank, providing it a distinction compared to other fintech startups.
“Kuda is the first digital-only bank in Nigeria with a standalone license. We’re not a mobile wallet or simply a mobile app piggybacking on an existing bank,” Kuda bank founder Babs Ogundeyi told TechCrunch.
“We have built our own full-stack banking software from scratch. We can also take deposits and connect directly to the switch,” Ogundeyi added, referring to the Nigeria’s Central Switch — a SWIFT-like method that facilitates bank communication and settlements.
A representative for the Central Bank of Nigeria (speaking on background) confirmed Kuda’s banking license and status, telling TechCrunch, “As far as I’m conscious there is no other digital bank [in Nigeria] that has a micro-finance license.”
Kuda gives checking accounts with no month-to-month-costs, a cost-free debit card, and plans to give customer savings and P2P payments possibilities on its platform in coming months.
“You can open a bank account inside 5 minutes, do all the KYC in the app, and you get issued a new bank account quantity,” according to Ogundeyi. Ogundeyi — a repeat founder who exited classifieds internet site Motortradertrader.ng and worked in a finance advisory function to the Nigerian government — co-founded Kuda in 2018 with former Stanbic Bank computer software developer Musty Mustapha.
The two convinced investor Haresh Aswani to lead the $1.6 million pre-seed funding, along with Ragnar Meitern and other angel investors. Aswani confirmed his investment to TechCrunch and that he will take a position on Kuda’s board.
Kuda plans to use its seed funds to go from beta to reside launch in Nigeria by fourth-quarter 2019. The startup will also construct out the tech of its banking platform, which includes assistance for its developer group situated in Lagos and Cape Town, according to Ogundeyi.
Kuda also intends to expand in the close to future. “It’;s Nigeria for right now, but the plan is build a Pan-African digital-only bank,” he mentioned.
As of 2014, Nigeria has held the dual distinction as Africa’s biggest economy and most populous nation (with 190 million persons).
To scale there, and add some physical infrastructure to its on the net model, Kuda has correspondent relationships with 3 of Nigeria’s biggest economic institutions: GTBank, Access Bank and Zenith Bank.
He clarified the banks are partners and not investors. Kuda prospects can use these banks’ branches and ATMs to place dollars into bank accounts or withdraw funds with no a charge.
“Even though we don’;t own a single branch, we actually have the largest branch network in the country,” Ogundeyi claimed.
Kuda’s plans to produce revenues concentrate largely about leveraging its bank balances. “We plan to match different liability classes to the different asset classes that we create. That’;s how we make money, that’;s how we get efficiency in terms of income,” Ogundeyi mentioned.
In Nigeria, Kuda enters a potentially income-wealthy market place, but its a single that currently hosts a crowded fintech field — as the nation becomes ground zero for payments startups and tech investment in Africa.
In each raw and per capita numbers, Nigeria has been slower to convert to digital payments than top African nations, such as Kenya, according to joint McKinsey Corporation and Gates Foundation evaluation accomplished a number of years ago. The very same study estimated there could be almost $1.3 billion in income up for grabs if Nigeria could attain the very same digital-payments penetration as Kenya.
A quantity of startups — established and new — are going right after that prize in the West African nation — a number of with a approach to scale in Nigeria 1st ahead of expanding outward on the continent and globally.
San Francisco-primarily based, no-charge payment venture Chipper Money entered Nigeria this month.
Kuda CEO Babs Ogundeyi believes the startup can scale and compete in Nigeria on a quantity of variables, a single getting economic security. He names the organization’s official bank status and the Nigeria Deposit Insurance coverage Corporation safety that brings as one thing that can attract money-comfy bank customers to digital finance.
Ogundeyi also points to offerings and value.”We appear to be the subsequent generation bank exactly where you can do everything— savings, payments and transfers — and also the a single that’s least pricey,” he mentioned.