Umba, a digital bank functioning in Africa, has raised $15 million in a bid to expand into 3 new African markets.
This is coming after two years since the banking platform actualized a seed round of $2 million.
The fintech company said it’ll bring accessible and transparent products to people underserved by legacy banks in Africa. Presently, just 43% of the continent are financial institutions’ account holders.
Tiernan Kennedy, Umba CEO, revealed that its company runs the credit-led model led by Nubank, where it’ll firstly solve liquidity issues for customers before upselling on a wide spectrum of banking activities and products.
It means that apart from getting a no-fee current account, free payments, and bill payments, the bank users will access loans.
The CEO revealed that the fintech company utilizes proprietary data from customers to provide credit products.
Umba generates most revenues from charging customers a 10% interest per month.
According to the CEO, “I’d like to think that we’re the cheapest in the market. The reason is we’re collecting data, making automated underwriting and retraining models every month based on customer performance to deliver credit in seconds,”
“Also, we’re best in class in terms of lending, which allows us to offer the lowest interest rates in the markets,” he added.
Significantly, as part of the raise and series A round, the fintech firm convinced some Nubank executives to wire some checks.
The bank CEO stated “The Nubank guys saw what we’re doing and recognized it is the right model for emerging markets. Credit is the hardest problem to solve and underwriting customers at scale in multiple markets is challenging. It took us 18 months to build that. But now it’s up and running and performing.”
Apart from Nubank, other investors are Tom Blomfield, the co-founder of Monzo, and previous backers Lachy Groom and ACT Ventures.
New investors like Lux Capital, Palm Drive Capital, Banana Capital, and Streamlined Ventures also participated. The VC firm Costanoa Ventures led the round.
Creating an interoperable digital banking activity and experience in African markets isn’t an easy feat, particularly between mobile money and bank operators.
And Umba hasn’t yet fulfilled Kennedy’s claims considering its operation in Nigeria. However, it’s early to state if the fintech company can provide financial services and underwrite loans in various systems in Africa.
Nevertheless, this new initiative and funding would permit the firm to test its initiative as it gets ready to launch in the new markets in Ghana, Egypt, and Kenya markets where mobile money has become prominent.
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