Umba, the digital bank for emerging markets, has launched its digital banking operations in Kenya after acquiring Daraja Microfinance Bank, six months ago in a move expected to enable to offer full banking services in Kenya, including current accounts, interest-bearing savings accounts, fixed deposit accounts, lending, and payments.
Umba, which has no expensive branch network and runs its own technology in-house, frees lots of capital and fees that legacy banks typically pass on to their customers in the form of account fees.
According to Umba CEO, Tiernan Kennedy, “ Kenya needs a great digital bank to offer the services that customers want, without the massive fees they have been paying to the legacy players. The winners here will be who provides the best services and we’re confident in our Team’s ability to deliver.”
With Umba every product is available within the App, including account opening and customer support. The platform offers a growing range of banking services to their customers, which include consumers and SMEs, who are largely underserved by legacy brick and mortar banks. Umba’s accounts are insured by the Kenya Deposit Insurance Corporation (KDIC).
Despite being a world leader in digital payments, being the home of M-Pesa, Kenya still has a small footprint in digital banking compared to other markets compared to other markets. Nigeria has almost 900 licensed microfinance banks, a number of which have been digitized, however Kenya has just 13, with almost all running traditional branch operations. This opens up a large opportunity for Umba, who has been proving its ability to scale in Nigeria with a growing number of customers and products, which will enable it to achieve a large market share quickly in Kenya.
“We couldn’t be happier to close this transaction. So many of us have worked incredibly hard over the past two years to make this happen. Looking forward, we see great things happening in the Kenyan market from a variety of young disruptive technology startups. I feel the next few years are going to see some great new businesses be created on the continent and we are beyond excited to bring fresh, innovative new ways for businesses and consumers to bank to the Kenyan market,” said Umba CFO, Barry O’Mahony.
Umba, formerly Mkopo Kaka raised an undisclosed equity financing round for its test runs in Kenya four years ago. Later it raised $2 million for its launch in Nigeria and $15 million Series A to continue rapid growth in Nigeria and expand into Egypt, Ghana and Kenya where mobile money and digital banking is popular.
Umba has strong backing from leading Fintech investors, including Costanoa Ventures, who led their Series A, Lachy Groom, Lux Capital and Palm Drive Capital as well as strategic angels such as Monzo founder Tom Blomfield and executives from NuBank (the largest digital bank in the world) and Chandaria Capital, who strongly supported the Kenya launch.
The firm recently appointed Peter O’Toole and Dan Watts to strengthen their leadership team. Peter is an experienced CFO and financial services expert, with 30+ years experience in leadership positions. He has lived and worked in Africa for the past 12 years, where he was Group CFO of Interswitch and CFO of Renmoney. Dan has spent the past 10 years building innovative and sustainable lending programmes with banks and Fintechs across Africa, in his role of Chief Credit Risk Officer at both Renmoney and Carbon.
Tiernan spent time in Africa in 2010 where he first used the Mpesa payment service in Kenya after its launch by Safaricom in 2007. After moving to New York City in 2012, he was the founding CTO of PearUp. Tiernan then joined Canary in 2014, where he led the engineering team. The company was an early adopter of deep learning – using big data & distributed systems to identify humans and pets to enable best-in-class home security. Looking for the next challenge, he built the Umba banking system from scratch when the founders bootstrapped the business before their first investment round. He holds two USPTO patents in geolocation and embedded device telemetry. He is a graduate of Computer and Electronic Engineering from Trinity College Dublin.
“We’re delighted to see Umba launch in Kenya. We invested with the knowledge that they had a unique entry point into the Kenyan market, as well as a strong business in Nigeria. We believe that Umba bring a really strong offering to consumers and businesses. The team has been shipping value to their customers month over month and the result is an excellent product. Going from one country to two can be a big challenge, but the opportunity is huge when executed well. We’re excited to continue supporting this Team and this market opportunity.” concluded Mark Selcow, Costanoa Ventures.