NIGERIAN digital-only retail bank Kuda has raised $1.6m in pre-seed funding following the receipt of its banking license from the Central Bank of Nigeria (CBN) that authorises it to operate as a micro-finance house.
A financial technology start-up Kuda is a Lagos and London-based company that recently launched the beta version of its online mobile finance platform. Having also received its banking license from the CBN, Kuda now offers account checks with no monthly-fees, a free debit card and plans to offer consumer savings and P2P payments options on its platform in coming months.
Founder Babs Ogundeyi, said: “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 and we can also take deposits and connect directly to the switch. 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.”
A CBN spokesman added: “As far as I’m aware there is no other digital bank in Nigeria that has a micro-finance license.”
Mr Ogundeyi, a repeat founder who exited classifieds publication Motortrader and worked in a finance advisory role to the Nigerian government, launched Kuda in 2018 with former Stanbic Bank software developer Musty Mustapha. They then convinced investor Haresh Aswani to lead the $1.6m pre-seed funding, along with Ragnar Meitern and other angel investors.
With the development, Mr Aswani will take a position on Kuda’s board. Kuda plans to use its seed funds to go from beta to a live launch in Nigeria by the fourth quarter of this year and will also build its banking platform, including support for its developer team located in Lagos and Cape Town.
Kuda also intends to expand in the near future, transforming into a genuine Pan-African digital-only bank. Kuda has relationships with three of Nigeria’s largest financial institutions in GTBank, Access Bank and Zenith Bank and its customers can use these banks’ branches and ATMs to put money into accounts or withdraw funds without a fee.
“Even though we don’t own a single branch, we actually have the largest branch network in the country. We now 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,” Mr Ogundeyi added.
He said he believes Kuda can scale and compete in Nigeria on a number of factors, one being financial safety. Mr Ogundeyi names the company’s official bank status and the Nigeria Deposit Insurance Corporation security as something that can attract cash-comfortable bank clients to digital finance.