Irish founded fintech Umba has launched its services in the Kenyan market, offering an opportunity for the company to increase its market share.
The launch comes following Umba’s acquisition of a majority shareholding in Daraja Microfinance Bank, which allows it to offer full banking services in Kenya. That includes current accounts, interest-bearing savings accounts, fixed deposit accounts, lending and payments. Umba executives said it reflects alengthy period of work to get the acquisition completed.
The digital bank, which was founded by Tiernan Kennedy and former Munster rugby player Barry O’Mahony, offers a transparent and accessible digital financial service alternative to legacy African banks.
Kenya is one of the largest markets in Africa, with a young population that is growing significantly. However, it is significantly underserved by the next generation of fintechs and bricks-and-mortar banks, partly due to a more stringent licensing system.
“To give an example there’s like 600+ microfinance bank licenses in Nigeria; there’s 13 in Kenya,” explained Mr Kennedy, Umba‘s chief executive. “We’ve got one of the 13 for the entire country. And there’s only one other player doing digital, so it’s a huge opportunity. It’s basically a market that’s been locked out. This allows us to compete heavily in the market.”
Umba will be able to offer services to customers without the expense of a legacy branch network. It also develops its own software, which eliminates the need to pay out large licensing fees to banks, offering account opening and customer support within its own app.
It has also built a thriving business in Nigeria, providing a foundation for its entrance into the Kenyan market, which opens up millions of potential customers to its services.
“Looking forward, we see great things happening in the Kenyan market from a variety of young disruptive technology start-ups,” said Umba chief financial officer Mr O’Mahony. “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.”
Backed by fintech investors such as Costanoa Ventures, Lachy Groom, Lux Capital and Palm Drive Capital, along with a number of angel investors, Umba has raised more than $18 million (€16.8 million) in funding to date. Following its Series A round in February last year, the company was valued at $60 million.
“We invested with the knowledge that they had a unique entry point into the Kenyan market, as well as a strong business in Nigeria,” said Mark Selcow, Costanoa Ventures. “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.”
