There is no shortage of digital banks in Nigeria and, in general, in Africa. As the region continues to experience rapid growth in mobile usage and the corresponding growing young population, these fintechs believe now is the right time to provide financial services to all market categories, from the banked to the unbanked. banked.
We’ve covered a host of these platforms in the past. Their main focus is to provide financial services to the underserved market, so their customers basically overlap. In the latest development, Umba, a digital banking platform operating in Lagos, Nigeria, raised $15m in Series A funding. The news comes nearly two years after the fintech raised a $2 million funding round.
Umba said it offers a wide range of transparent and accessible financial products to those underserved by traditional banks across Africa – only 43% of the region’s population hold accounts at financial institutions.
Its features include free bank accounts, bank-to-bank transfers, peer-to-peer transfers, and bill payments. These are standard features provided by digital banks in Africa, whether first deposit like Kuda, credit first like FairMoney or Carbon, or both like Fintech Farm.
Company CEO Tiernan Kennedy told TechCrunch on a call that Umba leverages the credit-driven model pioneered by Nubank, where it first solves the liquidity problem for customers before selling them on a wide range of banking products.
So, besides to get a fee-free checking account, free payments and bill payments, Umba users can access loans. Kennedy said the company uses proprietary customer-generated data to offer credit products. Fintech generates most of its revenue by charging consumers 10% monthly interest.
“I like to think we’re the cheapest on the market. The reason is that we collect data, create automated underwriting and recycling models every month based on customer performance to provide credit in seconds,” said Kennedy, who founded the company with CFO Barry. O’Mahony in 2018. “Plus, we’re best-in-class in terms of loans, which allows us to offer the lowest interest rates on the market,” he says.
interesting wayas part of this Series A, Umba convinced some Nubank executives to wire checks.
“The guys at Nubank saw what we were doing and recognized that it was the right model for emerging markets. Credit is the most difficult problem to solve and guarantee customers on a large scale in many markets is difficult. It took us 18 months to build it. But now it’s operational and performing,” Kennedy added.
Other investors include Monzo co-founder Tom Blomfield and former backers Lachy Groom and ACT Ventures.. New investors such as Lux Capital, Palm Drive Capital, Banana Capital and Streamlined Ventures participated, while venture capital firm Costanoa Ventures led the round. The fintech has raised a total of $17.5 million to date.
Umba has been in business for about two years now. Kennedy did not divulge specific numbers when asked to share some financial data, saying only that the company had doubled its revenue every three months since its launch 18 months ago with more than one million. installs on Google Play Store.
Kennedy credited the company’s focus on engineering and customer experience as key to this growth.. He also said they would be instrumental in Umba’s willingness to serve many markets, currencies and payment infrastructures.
“Typicallylike a historical bank, some startups purchase off-the-shelf banking systems and customize them for their clients. But they don’t put the customer first. For us, we have designed basic banking systems from the ground up and can deliver personalized customer experience at a glance in the banking and mobile money markets,” said the Managing Director.
“We can take all of this open banking data and subscribe at scale with these different payment types and fragmented data types.. What that means for us, in practice, is that we’re multi-currency, we can go to multiple countries, we can do all different types of payment. And that takes time. But then when you get your ability to move extremely fast against competitors.
Establishing an interoperable digital banking experience in African markets is a daunting task, especially between banks and mobile money operators. And Umba has yet to materialize Kennedy’s claims, given his only operation in Nigeria. Thus, it is still too early to say whether the company can underwrite loans and provide financial services through various systems on the continent.
Howeverthe new funding will allow the company to test this as it prepares to launch into new markets, including Egypt, Ghana and Kenya, where mobile money is prominent.
Prior to Umba, Kennedy was the CTO of PearUp, a dating app, and led the engineering team at IoT company Canary. O’Mahony, on the other handwas the former chief operating officer of Tola Mobile, a British fintech operating in Uganda, Rwanda, Mozambique, Tanzania and Kenya.
The founders told TechCrunch that they recruited several key people for Umba’s new phase of geographic growth, including the former CFO of Interswitch and senior Zynga executives.
Umba will also expand in terms of products by rolling out debit cards, savings accounts and equity trading over the next 18 months.
“At present, we have solved the credits and expenses; the next step is savings and investments, the creation of new markets that open up, that is, the hiring of personnel in our three new markets,” added Kennedy.