Kuda secures $1.6m pre-seed funding to start a first online retail banking in Nigeria

Kenneth Afor with agency report

Kuda, Nigeria’s only online retail bank has secured pre-seed funding of $1.6 million to commence online digital retail banking.

The fund was provided by some angel investors including Haresh Aswani, managing director, Tolaram Group Africa, and Lekki Port, Ragnar Meitern among others.

Kuda is a Lagos and London-based company licensed by the Central Bank of Nigeria (CBN) as a micro-finance bank.

Babs Ogundeyi, founder of Kuda said the fund secured would be used to upgrade its mobile app which is in its testing stage and will be fully launched in Nigeria by the fourth quarter of 2019.

He added that Kuda been the first digital-only bank is not a piggybacking app with existence from other banks but an independent bank.

He said, “Kuda is the first digital-only bank in Nigeria with a stand-alone license. We are not a mobile wallet or simply a mobile app piggybacking on an existing bank. It’s Nigeria for right now, but the plan is build a Pan-African digital-only bank.

Ogundeyi hinted that the switch system, Nigeria’s Central Switch – a SWIFT-like system that processes bank’s communication and settlements and financial transactions.

“We have built our own full-stack banking software from scratch. We can also take deposits and connect directly to the switch,”, he said.

On Kuda’s platform, customers can check account balance with no monthly charges, request for a free debit card and also, it plans to offer customers savings and Peer-to-Peer (P2P) payment options in coming months.

Ogundeyi added, “You can open an account within five minutes, do all the KYC in the app, and you get issued a new bank account number.”

Ogundeyi clarifies Kuda’s relationship with Guaranty Trust Bank, Zenith, and Access banks are purely on partnership bases and not as investors adding that customers can use these banks’ branches and ATMs to deposit money into bank accounts or withdraw without a charge.

“Even though we don’t own a single branch, we actually have the largest branch network in the country,” he said.

Ogundeyi Kuda’s revenue will be sourced from its bank balances.

“We 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,” he assures.