Nigerian FinTech startup, Kuda, has raised the sum of $1.6 million for the purpose of deepening its inclusion and maintaining the operation of its virtual branches.
The funds were raised in Pre-Series A round led by Haresh Aswani, the Managing Director, Africa Division of the Tolaram Group, Ragnar Meitern and other angel investors.
The startup which is modelled after the operations of a digital bank, primarily operates on smartphones via the prompt of a USSD code, ruling out any need for a building. The side attraction for the bank is that it can afford to charge reduced bank charges, thus providing a big competition for the mainstream banks.
While commenting on the financing, the founder of Kuda Bank, Babs Ogundeyi said, “We profit when our customers are happy to keep their money with us. We do not charge card maintenance fees or account maintenance fees or COT or any other code name that is used to extract fees from customers.“
How the funds will be deployed: Having launched a beta version of its mobile application in August this year, the company has been working to commence full operations after product testing. With the newly generated funds, the bank is looking to commence operations in the final quarter of the year.
The company disclosed that part of the money would be divested into further development of the banking platform to make it more secure. There are also plans in the works to include support for a Lagos and Cape Town-based developer team while eyeing a Pan-African digital-only bank status.
What this means: The FinTech will be able to process large amounts of data in real-time and give customers more control over their financial choices through its real-time disbursement of data.
What you should know: Kuda enters an already crowded fintech market with major players like Piggyvest, Flutterwave, Paga, Paystack to name a few. This is a boost in the potentially revenue-rich market as the country becomes ground zero for payments startups and tech investment in Africa
Brand Repositioning: The startup began as Kudimoney before rebranding to Kuda as a result of the adoption of the name “Kudi” by several fintech startups. Kuda is different from Kudi, a Series A stage Nigerian utility payments startup. Kuda also struck partnerships with three of Nigeria’s Tier 1 banks, GTBank, Access Diamond and Zenith to scale up their branding efforts. Ogundeyi did well to clarify that the banks are partners, not investors.
About the company: Kuda, was founded in 2018 by Babs Ogundeyi and Musty Mustapha. The company runs predominantly on smartphones and via a USSD channel. Even without physical locations (branches), the company claims to be the most connected bank in Nigeria. The startup received a license from the Central Bank of Nigeria in June this year.