Umba, the digital bank for emerging markets has raised $2 million seed funding round to expand product capabilities in Kenya and Nigeria where it’s currently operating.
The $2 million seed round was from Ludlow Ventures and Lachy Groom, ex Head of Issuing at Stripe. Frontline Ventures and Act Venture Capital added to their previous investment in the company.
According to Umba’s CEO, Tiernan Kennedy, “From the outset we built our platform to serve multiple markets, currencies and payment infrastructures. This flexibility is an extremely important consideration as it’s much harder to upgrade your systems at a later date. For example bank and debit card penetration is high in Nigeria, so Umba is deeply integrated into those payment methods, while across Kenya and East Africa mobile money is dominant so our platform is tightly integrated with those services, too. Having a platform that can service those diverse sets of needs is a key reason why Umba can scale up this business fast.”
Umba, an alternative to legacy African banks, in July last year raised an undisclosed equity financing round from ACT Venture Capital, Frontline Ventures and Bloom Equity to expand to more markets in Africa to provide micro-loans to Africa’s unbanked population.
Umba is currently available in Kenya and Nigeria, representing the top two markets for venture investment in Africa, with a combined population of over a quarter of a billion people. The funding will enable Umba to expand and scale their product offering across these two markets in the coming months, adding debit cards, saving schemes and referrals.
Umba offers its services through a mobile app where customers have access to a free checking account, free instant peer-to-peer money transfers, lending, deposits, BillPay and cashback.
The app aims to eliminate the high-cost barriers and inconvenient payment processing methods found across traditional banking institutions in African countries that make basic banking inaccessible for millions of people. It opens up a range of new financial services and provides accessibility to those who previously had limited banking options.
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“Umba is the first investment we’ve made in the African market and it’s one we were excited to participate in. The team at Umba have an excellent service that drives down the cost of banking for their customers and democratises access,” said Ludlow Ventures Partner, Brett DeMarrais. “The move away from physical branch infrastructure was already underway and it has accelerated this year.”
As an investor, Brett says it’s very encouraging to see the increased investment activity in Africa such as the Jumia IPO to the Visa investment in Interswitch to the acquisitions this year of PayStack, DPO & Sendwave acquisitions for $288m and $500m respectively and investments into Africa by personalities like Mark Zuckerberg, Jeff Bezzos among others.
“It’s clear the African market is maturing and that we’re entering a very interesting phase,” added Brett.
With smartphone penetration and mobile money accounts in Kenyan and Nigerian markets hitting an all-time high, Umba aims to meet the needs of the rapidly-growing African mobile payments market where the presence of secure mobile banking apps options are limited.
The market opportunity is huge and the venture rounds and acquisitions are going to grow.
“Umba is setting itself on a growth trajectory in a market that has seen revolutionary adoption of mobile banking. Customers are seeking convenience, quick turnaround of transactions, low fees and a user-friendly platform. These are the hallmarks of the Umba App and ecosystem. Africa’s growth is centered around financial inclusivity and especially access to affordable credit. Most governments in Africa are currently putting in place policies that are friendly to deepening the financial sector. Umba aims to bridge this gap and offer products that will ensure easy and convenient access to banking products across all divides,” said Kenas Otieno, Umba’s Head of Compliance.
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