There is no shortage of digital banks in Nigeria and in general in Africa. As the region continues to experience rapid growth in mobile device usage and a correspondingly growing youth population, these fintechs believe the time is right to bring financial services to all market categories, from the banked to the unbanked. banked.
We have covered a lot of these platforms in the past. Their general argument is to provide financial services to the underserved market, so their customers essentially overlap. In the latest development, Umba, a digital banking platform operating in Lagos, Nigeria, has raised $15 million in Series A funding.. The news comes nearly two years after the fintech raised a $2 million seed round.
Umba said it brings a wide range of transparent and accessible financial products to those underserved by legacy banks in Africa: only 43% of the region’s population are account holders at financial institutions.
Its features include free bank accounts, interbank transfers, peer-to-peer transfers, and bill pay. These are standard features that digital banks in Africa provide, whether they prioritize deposit like Kuda, credit first like FairMoney or Carbon, or both like Fintech Farm.
The company’s CEO, Tiernan Kennedy, told TechCrunch in a call that Umba operates the credit-based model pioneered by Nubank, where it first solves the liquidity problem for customers before selling them a broad spectrum of banking products.
So, what’s more to obtain a current account without commissions, free payments and bill payments, Umba users can access loans. Kennedy said the company uses proprietary data generated by customers to offer credit products.. The fintech generates most of its revenue by charging consumers 10% monthly interest.
“I would like to think that we are the cheapest on the market. The reason is that we collect data, create automated underwriting and retraining models every month based on customer performance to extend credit in seconds,” said Kennedy, who founded the company with CFO Barry O’Mahony in 2018. “In addition, we are the best in its class in terms of loans, which allows us to offer the lowest interest rates in the market,” he says.
curiouslyAs part of this Series A round, Umba convinced a couple of Nubank executives to transfer some checks.
“The guys at Nubank saw what we’re doing and recognized that it’s the right model for emerging markets. Credit is the hardest problem to solve and enroll customers at scale in multiple the markets is challenging. It took us 18 months to build that. But now it’s working and working,” Kennedy added.
Other investors include Tom Blomfield, the co-founder of Monzo, and previous 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 operation for about two years. Kennedy didn’t divulge hard numbers when asked to share some financials, saying only that the company has doubled its revenue every three months since it launched 18 months ago with more than 1 million installs on the Google Play Store.
Kennedy acknowledged that the firm’s focus on engineering and customer experience has been key to this growth.. He also said that they would be instrumental in pushing Umba to serve multiple markets, currencies and payment infrastructures.
“Typicallylike a legacy bank, some startups buy ready-to-use banking systems and customize them for your customers. But they are not thinking of the customer first. For us, we design core banking systems from the ground up and can deliver a personalized customer experience in the blink of an eye in both the banking and mobile money markets,” said the CEO.
“We can take all that open banking data and underwrite at scale with these different payment types and fragmented data types.. What that means for us, in practice, is that we are multi-currency, we can go to several countries, we can do all the 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 challenging, especially between banks and mobile money operators. And Umba has yet to update Kennedy’s claims, given his only operation in Nigeria. Therefore, it is too early to say whether the company can underwrite loans and provide financial services in various systems on the continent.
Neverthelessthe new financing will allow the company to test this as it prepares to launch in 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 handHe was the former COO of Tola Mobile, a UK fintech with operations in Uganda, Rwanda, Mozambique, Tanzania and Kenya.
The founders told TechCrunch that they have made several key hires for Umba’s new phase of geographic growth, including the former CFO of Interswitch and senior staff from Zynga.
Umba will also make some product expansions, rolling out debit cards, savings accounts and stock trading over the next 18 months.
“At this time, we have resolved credits and expenses; what follows is savings and investment, creating the opening of new markets, that means hiring personnel in our three new markets”, added Kennedy.