Kuda, Nigerian fintech startup, and digital-only retail bank has reportedly raised $10 million in seed funding.
The company based in Lagos and London had launched the beta version of its digital mobile finance platform. It also received its banking license from the Central Bank of Nigeria, which distinguished it from other fintech startups. Kuda's banking license and status was confirmed by a representative of the Central Bank of Nigeria, who spoke with Techcrunch in 2019.
This investment by Kuda represents the largest seed fund so far raised in Africa by a tech company.
The investment is the company's second fundraising, coming after a $1.6 million pre-seed investment made back in September 2019. Kuda, according to Babs Ogundeyi, the bank company's CEO, aims to cater to every African across the world regardless of where they might be.
The seed funding by initiated by Kuda was led by Target Global, a European VC firm, and was supported by SBI Investment and Entree Capital. Other investors include Johan Lorenzen (founder of Holvi), Brandon Krieg/Ed Robinson (founders of Stash), Raffael Johnen (founder of Auxmoney), and Oliver Lish Jung (angel investors in Nubank, Revolution, and Chime).
Kuda has come quite a long way since it's rebrand from Kudimoney, simple fintech platform which offered regular fintech solutions. Kudimoney in July 2019 received a Microfinance banking license from the Central Bank of Nigeria (CBN), which was a significant push in its transition into Kuda; a full service digital bank with no cost of services.
From the onset, the fully-licensed digital bank spelt it out straight that it sought to challenge the existing banking system that is most fraught with stories of often inefficient services in addition to outrageous charges on their services to the million customers banking with them.
This was sequel to a report in 2018 that the customers of the top 11 Nigerian banks were charged a total of N143 billion as account maintenance fees. Out of this sum, over N65 million was recovered by the Central Bank of Nigeria as wrongfully deducted charges by the banks from customers’ deposits as transaction fees.
Kuda could however did not commence full digital banking services until September 2019 after the successful completion of the pre-seed funding of $1.6 million which enabled it to deploy its app and launch its operations generally in Nigeria. The company's CEO, Babs Ogundeyi, at the time, noted that the bank would not be operating as a glorified fintech platform.
“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". Babs Ogundeyi stated, making reference to Nigeria's Central Switch, a SWIFT-like system that facilities bank communication and settlements.
Kuda to a large extent has kept to its promise, exactly a year after it launched, delivering full banking services, offering payments options, deposits and withdrawals. But, the digital bank beyond all these, launched its Web feature in June 2020, which allows its customers to track their money in real-time.
Kuda at present has around 300,000 customers and every month it processes over $500 million worth of transactions. The digital bank, according to the CEO, also plans to formally launch a small business product whose features will be designed for small business owners and entrepreneurs in 2021.
Putting in perspective the rate of charges made by banks on their customers' transactions as well as on maintenance today, it is Something of great news to have a bank like Kuda come into the scene as a rescue hand held out to aggrieved bank customers. Kuda's success with its objectives can therefore not be in doubt as it promises even more advancement in its services that would convince more persons to que in on the line of its customers.
This achievement of course is besides the strides the company is making on the field amongst other fintech startups in the country. This will obviously make Kuda a model fintech startup and a challenge to upcoming entrepreneurs to lace up and be more innovative in their respective ventures to make good success and achieve optimum results in their fields.