- Kuda Bank entered the Nigerian banking industry in 2017 as a then digital-only bank and won hearts
- Kuda uses technology as part of its advantage over conventional banks and targets the young population in Nigeria
- Experts are divided on the viability of Kuda’s model, but believe it is new and laudable in the face of the emerging technological age
For the most part, Kuda Bank is branchless. This means he has no physical structures, nowhere to physically go and file complaints if something is wrong.
But that has not deterred Nigerians, especially young people, from opening an account with him.
At last count, the bank had more than 1.4 million customers since its inception in 2017, five years ago.
It challenges traditional banks with physical branches and structures to dance to and it’s a winner.
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The bait for Kuda customers
The bank largely caters to the suave, tech-savvy and ever-growing youthful population in Nigeria.
At the touch of a button, potential depositors have opened accounts with Kuda and their service delivery is top notch.
Their use of technology in operations is the main lure for people who prefer convenience and ease of banking.
Ifeanyi Udeozor, a financial analyst, told Legit that Kuda Bank has studied the technology ecosystem in Nigeria and knows that operating a digital-only bank will fly into a population familiar with the use of smartphones and smart devices.
“I feel like the bank knows the psychology of Nigerians very well. They know their model will resonate with certain demographics in Nigeria. They don’t care about other people who, they just do their thing and they win hearts for it.
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Ride on the back of goodwill
Last year, the bank raised a whopping $55 million in a funding round that allowed it to expand its operations.
The $55 million Series B round comes on the hills of a $25 million Series A round announced just over four months earlier, bringing the startup’s valuation to $500 million.
Business Insider reports which co-founder and CEO Babs Ogundeyi explained that the money would be used to double down on new services for Nigeria and prepare for its launch in more countries on the continent.
What Ogundeyi said:
“We have done a lot of resource deployment in our operating entity, in Nigeria. But now we are doubling down on expansion, and the idea is to build a strong team for Kuda’s expansion plans. We still see Nigeria as an important market and we don’t want to be distracted, so we don’t want to disrupt those operations too much. It is a strong and competitive market. This is an area over which we believe we should have control. So this funding is to invest in expansion and to have more experience in the business versus expansion.
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For Babs and Musty, it was always about building a pan-African bank, not just a Nigerian leader, said Ricardo Schäfer, partner at Target Global. The prospect of banking over a billion people on day one really stuck with me at first.
Technical expertise and quick response
Udeozor said the bank will not just crush existing commercial banks that have been stuck in the past, but will surpass them in terms of goodwill.
“They react quickly to problems. They send updates when things are not going well. Whether it’s via email or in-app message, Kuda Bank makes sure you don’t miss any information they’re trying to get across.
Kelechi Okoro, a former banker and analyst that traditional banks are getting greedy and throwing everything about customer service to the winds.
“They are not only greedy but heady and proud. Their staff treat customers with disrespect in most cases. Their customer service is rapidly deteriorating.
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I’m not surprised that today’s young population is flocking to digital banks like Kuda.
But, Jide Okeowo, a reporter doesn’t believe Kuda is quite there yet. He said most Nigerians are still skeptical about the internet.
“Many Nigerians including myself believe in seeing and believing. How am I going to trace my money if something catastrophic happens? I believe in walking into a bank, watching people in the eyes and see them deal with my problem.”
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Legit.ng reported that the Nigerian financial industry landscape is replete with exciting options, most of which give users the opportunity to make a choice that enables them to make optimum use of it.
While some banks in Nigeria pay higher interest to depositors for saving money with them, others are just there to make a profit and show great numbers at the end of their financial year.
The minimum interest rate approved by a regulatory body like the Central Bank of Nigeria (CBN) is 1.5%.