Nigeria’s pioneering fully digital bank, Kuda, has raised $10 million in seed funding. This makes the fintech startup the first technology firm in Africa to achieve such a feat.
Kuda had in September 2019 raised $1.5 million pre-seed investment.
The digital bank which offers virtually all its services for free to its customers, goes against the grain of conventional banking business.
The CEO, Babs Ogundeyi, stated that the bank is out to serve the needs of Africans irrespective of where they are on the planet.
European VC firm, Target Global led the funding round and was supported by Entrée Capital and SBI Investment. Other notable investors include Raffael Johnen (founder of Auxmoney), Johan Lorenzen (founder of Holvi), Brandon Krieg/Ed Robinson (founders of Stash), and Oliver and Lish Jung (angel investors in Nubank, Revolut, and Chime).
Kuda has come a long way since rebranding from Kudimoney, a simple fintech platform offering regular fintech solutions. In July 2019, Kudimoney received a Microfinance banking licence from the Central Bank of Nigeria (CBN), a significant leap in its transition into Kuda; a full-service digital No-Fee bank.
The fully-licensed digital bank made it clear from the onset that it was seeking to challenge the existing banking system that is riddled with tales of often inefficient services coupled with ridiculous charges to millions of customers.
This followed a 2018 report that the top 11 Nigerian banks charged their customers a total of N143 billion as account maintenance fees. Of this sum, the CBN recovered over N65 billion charges wrongfully deducted from customers’ deposits as transaction fees.
But Kuda wouldn’t commence full digital banking services until September 2019 after the afore-mentioned pre-seed funding round which enabled it to deploy its app and generally launch its operations in Nigeria. At the time, its CEO, Babs Ogundeyi warned that the bank won’t be operating as a glorified fintech platform.
“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, CEO Kuda
Exactly a year after it launched, Kuda has largely kept to its promise, delivering full banking services, payments options, deposits and withdrawals. But beyond all these, Kuda launched its Web feature in June 2020. This feature allows its customers to track their money in real-time.
Presently, Kuda has around 300,000 customers and processes over $500 million worth of transactions every month. According to the CEO, the digital bank is also looking to formally launch a small business product whose features will be tailored for small business owners and entrepreneurs in 2021.