Kenya’s Fingo partners with Ecobank, launches neobank on $4M investment

Image credit: Fingo

Yesterday, Fingo, a YC-backed Kenyan fintech, launched its neobank, which it developed in partnership with pan-African financial institution Ecobank Kenya. Ecobank subsidiary unveiled the neobank, the first of its kind in the East African country, according to the couple, in a event with the country’s president, William Ruto, present.

It has taken a while for Fingo to get here since CEO Kiiru Muhoya and his co-founders James da Costa, Ian Njuguna and Gitari Tirima founded the Kenyan outfit in January 2021 to offer financial services that appeal to a rapidly growing African youth, which happens to be the youngest globally but the most economically marginalized.

For young adults in Africa, opening an account can take several hours to days, with multiple personal interactions and requirements to bring physical paper documents. In addition, they have to deal with expensive fees for sending money and maintaining their accounts. Nevertheless, they still struggle to access savings, insurance and credit, financial services Fingo promises to deliver to its users; However, they currently offer cheaper transfer fees, subsidized bill rates, cash-back rewards and other features including payment links and tailored savings plans.

After a $200,000 pre-seed round, Fingo entered YC S21 and raised $4 million in seed funding by the end of that year. Multi-stage venture capital firm HOF Capital led the round with participation from Hustle Fund, Pioneer Fund, TCVP, Launch Africa, Chandaria Capital, Naiban (Nairobi Angel Network), Chui Ventures, as well as from the co-founders of Monzo and Twitch and executives from Google, Facebook and Paytm. What followed was a signed partnership with Ecobank, and Fingo began integrating its software with the bank towards launch while simultaneously awaiting regulatory approval from the Central Bank of Kenya (CBK), which finally arrived in Q1 this year.

The Fingo app

Before CBK gave the go-ahead, all the while trying to understand the framework Fingo and Ecobank had set up for their relationship, especially in terms of data, transactions and customer interactions. Unlike Nigeria, where collaborations between banks and fintechs are common, allowing the latter group to launch quickly (ultimately contributing to why the country has attracted most of Africa’s fintech funding), they are few and far between in Kenya. Fingo claims to be the first Kenyan neobank, so it is quite understandable looking at how long it took to get approvals and go to market.

Meanwhile, Muhoya noted on the call that despite the wait, the fintech still has most of the venture capital it raised in the bank because it kept its 15-person staff and barely had expenses other than paying salaries and developing the software. So it’s not raising additional capital for operations, especially in this challenging fundraising environment.

Now that the partnership has been approved, the Fingo Africa app will offer its users a bank account “under 5 minutes”, along with free peer-to-peer transactions and instant access to more services such as savings, financial education and smart spending analytics, the company said in a statement. The fintech says it has received a waiting list of 50,000 customers within 24 hours of launch. However, it will have its work cut out for itself if its plan is to bring millions into a market where mobile money reigns supreme (Safaricom’s M-Pesa controls over 90% of that medium) and a banking sector dominated by the likes of KCB and Equity Bank (which has its digital banking products).

Fingo’s partnership with Ecobank, which claims to have the largest footprint of any bank in Africa, covering over 30 countries, could provide the scale fintech needs beyond Kenya. Both entities are planning a pan-African rollout, with an imminent expansion to the rest of East Africa by the end of the year, according to Muhoya. Digital banking counterparties serving consumers in that region include Finclusion and Koa.

“Our partnership with Fingo Africa is a critical milestone in our mission to equip Africa’s youth with the essential financial tools they need to succeed. Together, we will launch youth-focused financial products, including quick access to bank accounts, savings options and cost-effective transactions, across of Ecobank’s pan-African footprint,” Diallo Djiba, Ecobank Group’s senior fintech advisor, said in a statement. “We are excited to expand our current solutions through this partnership and be at the forefront of youth banking in Africa. Our aim is to reach millions of young people across the 33+ African markets where Ecobank operates.”