LoveA London-based and Nigerian-operated start-up is expanding into the UK, offering a suite of mobile-first and personalized banking services to Nigerians in the diaspora, leveraging existing staff in the country.
Digital banking has shown some success since its launch in Nigeria in 2019. Kuda says it has up to 5 million users, more than triple the money it raised last August in a $55 million Series B round to expand into other African countries. Like Ghana and Uganda this year.
From an administrative perspective, Kuda UK’s move is straightforward. Founded by Babs Ogundeyi and Musty Mustapha, the startup is a UK-based fintech that provides financial services to Africans (starting with Nigerians) in and outside of Africa. Likewise, SThe services provided to Nigerian users are carried out by our subsidiary, Kuda MFB Limited. On the other hand, Kuda EME Limited is another subsidiary that manages the newly launched services – one of which is shipping – to Nigerians in the UK.
Second, there is a business sense to it. Nigeria is the largest remittance market in sub-Saharan Africa and one of the top 10 globally. The exchange business is so big that in 2010 It will account for nearly 4% of the country’s GDP by 2020. However, sending money to Nigeria from places like the US and UK is always expensive. For example, it costs the sender 3.7% to send money from the UK – which is the second largest country after the US and is estimated to transfer £3 billion annually – to Nigeria, he said. Data.
And while international money transfer operators still control the lion’s share of the UK-Nigeria corridor, African consumer fintechs are keeping their own money in fees, most of which are transaction commissions. Some of them include Gray Finance, Payday, Lemon Finance and Kishi.
“I don’t think it’s necessarily crowded because obviously, there are still a lot of challenges in sending money to Africa, especially Nigeria,” CEO Ogandiyi said when asked about Kuda’s move to a relatively busy remittance space. “But for us, it is not just a money transfer game. There is the issue of user experience, convenience and cost.
Cuda’s approach is different. It says it’s fintech. Entering the UK market paying £3 with a transfer limit of £10,000. And Cuda, which has raised more than $90 million from investors such as Peter Thiel’s Vallar Ventures and Target Global, expects the transaction size to drop to between £250 and £500, Ogenday said.
Apart from remittances, Kuda also plans to offer direct debits and local transfers to Nigerians in the UK. These platforms have built sticky features that have resulted in strong adoption across various demographics, including Nigerians, a niche population Kuda is targeting at startups. So, it remains to be seen whether remittances, the low-hanging fruit, will be enough to achieve long-term value and if customers will be interested enough to use other services again and again.
Unlike its exchange product, which may have been built in-house, Kuda, like many neobanks, relies on a third-party, traditional banking platform, to provide these financial services. The on-demand platform for Kuda is Modular, an integrated payments platform for digital businesses to offer mobile wallets, virtual and physical cards, domestic UK transfers and direct debits.
“Ultimately, Kuda is building a one-stop shop for Africans, including services other than remittances. And our plan is not just for Africa, but for Africans everywhere,” Ogandi said of the expansion. “England is the first of the ‘Out of Africa’ destinations. We are planning to expand our Hawala service to other African countries for customers there and for the diaspora market.
