Nigerian Fintech Launches New Products, Explores Acquisitions

• Nigerian fintech banking startup Kuda is launching its UK operation to offer money transfers.
• Money from Britain to Nigeria is worth $3.1 billion each year, according to World Bank data.
• Kuda has been trying to diversify its revenue sources in 2022 and is looking for M&A.

Nigerian fintech startup Kuda is launching in the UK to offer its money transfer services for Africans.

The banking startup, which was founded in 2017, has raised $90 million in funding from the likes of Peter Thiel’s Valar Ventures and Target Global. While the company has long been based in London, the offering is only now available to users in the UK.

Kuda aims to serve the hundreds of thousands of Nigerians who either live, study or have family in the UK as part of an expansion drive.

It is a lucrative remittance route with around £2.7bn ($3.1bn) sent from the UK to Nigeria each year, second only to the US, with Kuda set to charge a flat fee of £3.44 with a transfer cap at pounds 10,000 ($11,500).

Kuda CEO Babs Ogundeyi said he wanted the company to be an app where Africans could handle all their financial needs.

“The plan has always been to provide financial services to Africans everywhere, we are more of a bank on the ground on the continent and outside of Africa the main attraction for people is to be able to send money home,” he said, outlining. the company’s ambition to open services to both Ghana and Uganda.

“We will take the lessons from this and replicate it in other regions going forward.”

The move comes at a difficult time for consumer-facing fintech companies, despite strong interest in startups from Africa, with investors no longer funding the sector globally to the same extent.

Ogundeyi admitted that the company might have focused less on generating revenue under different circumstances. Like most fintechs, the startup has found that growth is no longer a leading metric for investors amid a macroeconomic downturn that has shifted sentiment toward sustainability.

Kuda, valued at $500 million, posted a loss of about $14 million last year and laid off about 5% of its workforce in recent months.

“We will continue to grow in Nigeria, but because of the times we are in, we need to demonstrate sustainability, not just focus on growth now that capital is more strained,” he added.

“It’s important to diversify potential revenue streams so the more products the better for us.”

Kuda now offers commercial banking, equities and fractional trading in Nigeria, along with its remittance business, which Ogundeyi said helped the company diversify risk and reduced the need for investor cash.

“The challenge in the past was that everyone had money, which made everything more expensive and talent scarcer,” he said.

“Set-ups in the sector mean that there is more talent available and companies will become attractive because of the expertise that is being built up. M&A is likely in this environment, if companies no longer have access to cash or have not yet started to generate cash, so we is in a strong position to pick something up.”