Kuda: Nigerian Online-Only Banking Startup Raises $1.6 Million In Funding
Nigerian fintech startup Kuda, a digital-only retail banking platform, has raised US$1.6 million in pre-seed funding as it marks its beta launch.
The Lagos and London-based company launched in 2016 as a lending platform called Kudimoney. It also participated in the 2018 Startupbootcamp AfriTech accelerator programme. Kuda later rebranded in June and received a banking licence from the Central Bank of Nigeria (CBN) in preparation for the launch of a full service digital bank. This move gave it a distinction compared to other fintech startups.
Kuda bank founder and chief executive officer (CEO) Babs Ogundeyi spoke to TechCrunch, saying:
“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. We have built our own full-stack banking software from scratch. We can also take deposits and connect directly to the switch.”
He referred to Nigeria’s Central Switch — a SWIFT-like system that facilitates bank communication and settlements.
“Kuda is the future of banking in Africa. Our mobile-first bank is built to address the serious pain points for the world’s most mobile centric consumers. We are building a radically different type of bank that puts consumers back in control of their finances. With Kuda, our users get an intuitive mobile-first experience that is almost instant to set up, a world-class app and services that work seamlessly to make their lives easier.”
CBN’s regulatory approval also made Kuda Nigeria’s first and only full-stack and mobile-first bank. The startup recently launched the beta version of its online mobile finance platform in preparation for a full launch to the public in the fourth quarter of the year 2019.
This process has been assisted by the closing of US$1.6 million in pre-seed funding. In participation were Startupbootcamp; angel investor Haresh Aswani, the Tolaram Group; angel investor Ragnar Meitern, an early investor in Monese; and Bolt, among others. The startup will also build out the tech of its banking platform, including support for its developer team located in Lagos and Cape Town, according to Ogundeyi.
Haresh Aswani of the Tolaram Group, who will take a position on Kuda’s board, said:
“Kuda’s vision of democratising financial services and making it easily accessible and affordable for all Africans aligns with my philosophy on transforming industries and value creation. The founders of Kuda are extremely smart and knowledgeable about the space. I am excited to partner with Kuda and support their continued growth.”
The Kuda beta launch includes a range of features. They include a free banking platform with no monthly fees and a free debit card. It also has iOS and Android apps that track spending in real-time, and the lowest transfer rates in Nigeria with the option to pay bills and buy airtime. Furthermore, over the coming months, Kuda plans to offer consumer savings and rewards, as well as peer-to-peer payments.
According to Ogundeyi, “You can open a bank account within five minutes, do all the KYC in the app, and you get issued a new bank account number.” The repeat founder exited classifieds site Motortradertrader.ng and worked in a finance advisory role to the Nigerian government. He co-founded Kuda in 2018 with former Stanbic Bank software developer Musty Mustapha.
Kuda also intends to expand in the near future. “It’s Nigeria for right now, but the plan is build a Pan-African digital-only bank,” Ogundeyi said. The Kuda banking platform will include support for its developer team located in Lagos and Cape Town.
“Even though we don’t own a single branch, we actually have the largest branch network in the country,” Ogundeyi claimed.
To scale In Nigeria, Africa’s largest economy and most popular country, and also add some physical infrastructure to its online model, Kuda has correspondent relationships with three of Nigeria’s largest financial institutions. They include GTBank, Access Bank and Zenith Bank.
He also clarified the banks are partners and not investors. Kuda customers can use these banks’ branches and ATMs to put money into bank accounts or withdraw funds without a fee.