Umba, a digital bank for emerging markets, particularly Africa, this month secured $2 million in seed funding from investors – including Lachy Groom, Ludlow Ventures, Frontline Ventures, and Act Venture Capital – to expand its product capabilities across the African continent.
The company currently operates in Kenya and Nigeria, the top two markets for venture investment in Africa with a combined population of about 250 million.
Founded by Tiernan Kennedy and Barry O’Mahony, Umba has a mission to open up banking services for the huge underserved market that exists in Africa today. It was established to meet the needs of the rapidly-growing population, a huge portion of which is not included financially.
Many Nigerians are unbanked and lack access to formal financial services. Data from the bi-annual EFInA Access to Financial Services in Nigeria survey showed that only 39.5 million people, representing 39.7% of the adult population, were financially included, that is, had bank accounts as of 2018.
People who are not connected with the formal financial system lack opportunities to maximise their income and expand their businesses.
This market opportunity has drawn attention from multinational fintech investors, leading to groundbreaking acquisition and funding deals. Examples are the $200 million acquisition of Nigerian payment service startup Paystack by Stripe as well as the buyouts of DPO Group for $288 million and Sendwave for $500 million.
Through a mobile app, Umba offers free bank accounts and financial services to its customers as an alternative to traditional African banks. Users have access to a free checking account, free instant peer-to-peer money transfers, lending, deposits, bill payments, and cashback.
With the fast-growing adoption of mobile money in Africa, Umba accounts in Kenyan and Nigerian markets have increased significantly, driven by rapid smartphone and internet penetration.
The funding will enable Umba to expand and scale their product offerings across these two markets in the coming months, adding debit cards, saving schemes, and referrals to meet the needs of their customers.
Ameenah Hassan is an intern at Arbiterz.