Kuda recently announced closing yet another ‘big-shark’ Series-A funding put at $25 million, marking its biggest round so far since launch in September 2019.
Not only that the barely two-year-old startup secured its biggest funding yet, but to think that the latest is coming only four months after it previously secured a $10 million seed investment is quite impressive.
Making the third major round for the company, including a $1.5 million pre-seed funding at an early stage of the launch, the latest round brings Kuda’s overall funding to a total of $36.5 million.
The latest Series-A funding was led by Valar venture – who, although has invested in a couple of fintech startups, is for the first time backing an African startup – alongside other Angel investors.
Kuda, has by all definition possible, proven to be a true ‘challenger bank,’ considering the events that followed its launch.
The startup launched a few months before the pandemic; however, it has been able to scale the COVID-19 challenges.
By the time Kuda raised its pre-seed funding, it had approximately 300,000 customers; currently, the figure has more than doubled to about 650,000 customers, with a million mark imminent.
The Startup has seemingly achieved quite a lot in a very short period of existence. While the success could be attributed to many factors, its business model played a major role.
Unlike traditional banks, which charge for almost every transaction, Kuda bank operates a full-fledge digital and zero-fee banking system.
Here, users enjoy zero-charges on card maintenance, transfers, and automatic savings, among other benefits.
Thanks to its seamless and user-friendly mobile app, Kuda, as of November 2020, accounts for over $500 million in monthly transaction volume; however, it closed the month of February at $2.2 billion.
In comparison, this is a staggering boost from the $5.2 million processed during the corresponding period in 2020.
“We’ve got sufficient capital to fund our plans for the next 18 months”
Kuda has a dream big to impact many lives, especially Nigerians and Africans, which are its frontline target audience.
However, funding is highly essential to achieve many of its goals, including providing modern banking services for Africans worldwide.
Therefore, the latest funding boosts the company’s overall bearing, which according to Kuda’s Chief Operating Officer, Ryan Laubscher, can adequately implement its plans for the next 18 months.
“It is very important to us that our metrics are justifying the valuation that investors are buying into with their capital,” Laubscher said during an interview with Techcabal.
“Our growth is at the point where we need to beef up our technology and people. But in terms of our plans for the next 18 months, we’ve got sufficient capital to fund those plans.
“If we need more capital, it’s going to mean that something is going very right. And if that’s the case, we can rise again.”
Giving Kuda’s COO’s tone, it is safe to say that the startup could have gotten more funds than it eventually raised at its Series-A.
Specifically, Laubscher confirmed that the latest round was “oversubscribed, with a decent amount left on the table.”
At this pace, Kuda plans to accelerate the company’s growth further, both revenue and expansion-wise, in such that investors who couldn’t get on board at the Series-A remain motivated to partake during future raises.
It is also clear that the fintech solution company is keener about meeting and surpassing its goals rather than just raising funds when it’s not necessary.
Why should traditional banks be worried about neobanks?
Kuda bank, like most neobanks – financial technology firms that offer internet-only financial services – is building a platform that offers easy access to various banking services.
In addition to this, the platform is also offering a friendly user-interface and a modern approach to banking and investment.
Beyond the above, Kuda also allows its users to access different tools that can assist or perhaps help manage money more intelligently
Aside from the fundamental function of the digital platform, Kuda bank users enjoy other benefits, including the following;
Ease of registration and documentation
From our discovery, it takes less than five minutes to set up a Kuda account as well as complete required documentation e.g means of identity, although, it might take up to a week to have it verified.
As a Nigerian, you would agree that it takes far longer than five minutes to set up a traditional bank account, and that’s aside from the aspect of mobility and unnecessary delay at the bank.
Seamless banking experience
Another perk that a neobank like Kuda offers its users is easy banking.
One thing that differentiates both the traditional banks and neobanks is the ability to facilitate seamless banking.
This is, however, one area Kuda bank is best at, even though it is currently working on newer solutions to further improve its current user-experience experience.
“What really excites me is blowing people away with the quality of customer service where they really feel that they are loved by their bank,” Laubscher commented.
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One of the approaches Kuda has used to achieve seamless functionality is by offering products that are tailored for individuals on the platform.
Of course, this requires a lot of talents and finance to get this right, and Kuda doesn’t lack in either of the two; currently, the startup is reportedly building a large data and decision science centre in Cape Town, to further enhance its operations.
AI-based calculator ( Ease of budgeting)
Unlike traditional banks, Kuda provides its users with AI-based tools that are tailored to meet the specific needs of users.
One of such tools is Kuda Budget which also doubles as an AI-based calculator; it simply allows users to closely monitor their ‘money in’, ‘money out’, ‘Balance’, as well as create a ‘smart budget.’
Instant loan and issuance of debit card
Although, traditional banks also offer this service, the quickness of receiving loans on the respective platform differs.
Not only that Kuda users, especially those whose accounts double as a salary account, are entitled to speedy and readily-available loans, they also get it at a very competitive rate.
“We can offer loans to salaried customers instantly as long as their salary is with Kuda,” Co-founder and CEO Babs Ogundeyi said.
Interestingly, unlike some other neobanks who rely on other banks to provide backend deposit and other services, Kuda bank owns a microfinance banking license from the CBN.
“We have built the core banking services in-house so we own the full stack. This means we don’t have to piggyback on another financial institution. We may choose to partner on certain products but we don’t have to,” Ogundeyi was quoted as saying.
As for the future, he once told Techcrunch that the plan is to get full licenses “in what we consider key regions” while partnering in others where the existing infrastructure makes it more logical to do so.
“The reason for the full license is because of monetization,” he added. “As a bank, you need to be able to lend, and in Nigeria, if you don’t have a full license it’s hard to lend and make money.”
The possession of this license also allows Kuda, beyond just money management services, to also issue debit cards in partnership with Visa and Mastercard.
Lingering trust issues
Giving its current level of progression, it is obvious that more Nigerians are now adopting fully-fledged digital financial solutions.
However, due to its digital nature, getting people to have genuine trust in the platform is not as easy as it seems on the surface.
Nigeria’s Consumer Awareness and Financial Enlightenment Initiative (CAFEi) has projected a $6 trillion loss by 2030 to cybercrime within and outside Nigeria.
At this increasing rate, it is normal for Nigerians to be very skeptical about the adoption of fintech solutions like Kuda.
Acknowledging the trust issue, Ogundeyi said that people would become naturally comfortable with their money on the platform as they grow more trust for the brand.
Overall the latest funding round by the fintech startup signals a subtle yet strong message to the traditional banks who have to devices means to stay relevant in the wake of more neobanks.
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