There’s a now cliched quote attributed to Bill Gates regarding the difference between banks and banking. According to the said quote, ‘banking is necessary, banks are not’. For long, across the globe, the majority of the population have associated banking with banks and banks with physical structures where they carry out the banking activity.
Yet, in the recent past, that is rapidly changing. Making it a testament to the above quote. Starting with Europe and South East Asia, many startups focused on making banking branchless have emerged in the recent past. These were at first called digital banks for a more clearer term was coined - Neobanks. The most prominent ones are the UK’s Monzo as well as German’s N26.
Per The Balance, a Neobank is a digital technology firm that offers digital or mobile-only financial services. Some of the services such players do offer include - but not limited to - checking and savings accounts, payment and money transfer services, loans for individuals or businesses or other services including budgeting help and more.
Across Africa, a similar trend is emerging. In July 2019, Lagos based fintech Kuda announced that it had obtained a banking licence from the Central Bank of Nigeria. Many believe that this move will be the beginning of many fintech startups that are already providing banking services to eventually decide to become fully-fledged banks with licences from the authorities.
Per Digest Africa data, we have pointed out the startups that are either currently operating as Neobanks or those whose currently service offering puts them on a clear path to eventually becoming one. (Please note that the list is not exhaustive, and funding figures are based on what is made public).
Headquartered in Lagos, and co-founded by an ex-Jumia, Tunde Kehinde, Lidya - like many fintechs focused on lending - has designed algorithms that eliminate the need for collateral and uses a credit score to help customers unlock better rates and capital. To date, the startup has raised $8.1M across two funding rounds with Omidyar Network and Accion Venture Lab among their notable investors.
Founded in 2016 and initially called PiggyBank, the Lagos-based startup helps customers embrace the savings culture through exciting incentives that allow them to reach their personal goals. According to the startup, as of 2019, their quarterly savings feature is used by over 100,000 clients to help them reach their personal/general savings goals much faster. Earlier this year, they also announced a partnership with Landwey to support low and medium-income brackets in actualizing their dream of premium land ownership. With VilCap Investments and Leadpath Nigeria as the notable investors, PiggyVest has raised $1.6M from two Seed rounds. The startup is among the few across Africa co-founded by female entrepreneurs and has gone on to raise over $1 million in funding.
Another of Nigeria’s homegrown providing personalized financial services with “bank-grade security” per their website. Last year, Cowrywise was selected as one of the 50 winners of the Kairos K50 Tech Summit in 2018. To date, they have raised funding across three funding rounds Microtraction and Y Combinator as some of their notable investors.
Also backed by Microtraction and Y Combinator, Wallets Africa offers a wide range of financial services for digital natives and, like other Neobanks across Africa, aspires to create Africa’s first borderless digital bank. On their website, the startup lists that it partners with Providus Bank and Flutterwave for their business banking transactions.
SOL Wallet ($4.3M)
This South African company launched a service enabling retail customers to deposit money, save, invest, make payments and manage their expenses via mobile and web apps. Other features include the ability to register and create multiple currency accounts online, buy and sell currencies at interbank rates and trade crypto-currency among others. Though with scanty details available on how much was raised, public records indicate that they have raised at least $4.3M through a Seed round with Skywell Capital as one of their notable investors.
Eversend allows you to exchange, save and send money at the best possible rates. The company was co-founded by a Ugandan, Stone Atwine - who also serves as the CEO - in 2017 who previously ran Useremit. The start has taken part in a couple of accelerators including Techstars and more recently Google’s Launchpad accelerator. Currently, Evesend has operations across East Africa but harbours plans to extend its services across the continent.
Chipper Cash ($2.4M)
Founded by a Ugandan and a Ghanaian based in San Francisco, the pan-African mobile payments startup allows its users to send and request money across borders either for free or at a fraction of what the existing traditional means would cost you. This year, the startup announced the raising of its biggest funding round yet - a $2.4M Seed round led by Deciens Capital - as well as expansion beyond its initial markets of East Africa into West Africa - Nigeria to be specific. Founders Ham Sserunjogi and Maijid Moujaled also announced the startup’s partnership with Nigerian fintech Paystack and has gone on to leverage the latter’s payment gateway infrastructure to expand its mobile payments services into Nigeria.
Similar to Nigeria’s PiggyVest, Egypt’s 7aweshly has a savings platform that allows those who don’t have access to banks to commit to saving. The startup received $28k as part of participating in the North African Flat6Labs Accelerator program.
Founded by Babs Ogundeyi, the Nigerian fintech formerly known as Kudimoney announcing its rebranding to Kudabank early this year as well as securing a banking licence from the Central Bank of Nigeria. Now a fully-fledged financial institution, this neobank enriches lives by offering free banking services and making saving easy and rewarding. Overall, Kudabank has raised $1.77M from Pre-seed and Seed rounds.
Musoni Microfinance ($100K)
Dutch microfinance software company raised ksh100M (close to $100K) from Fonds European de Financement Solidaire, a private equity firm (PE) based in Luxembourg last year. Additionally, early this year, the company announced an undisclosed equity investment from Belgian Cooperative Society Alterfin and joined by a number of Musoni’s existing shareholders, directed to support the company’s continued rapid growth and drive expansion into new markets.