Yesterday, Fingo, a YC-backed Kenyan fintech, launched its neobank, which it developed in collaboration with pan-African financial institution Ecobank Kenya. The Ecobank subsidiary unveiled the neobank, the first of its kind in the East African country, according to the couple, at a event with the president of the country William Ruto, in attendance.
It took Fingo a while to get here since CEO Kiiru Muhoya and his co-founders James da Costa, Ian Njuguna and Gitari Tirima he founded the Kenya team in January 2021 to provide financial services that appeal to a rapidly growing young African population that happens to be the youngest in the world but the most financially marginalized.
For young adults in Africa, opening an account can take several hours or days, with multiple in-person interactions and requirements to bring physical paper documents. Plus, they have to deal with expensive fees to send money and maintain their accounts. However, they still struggle to access savings, insurance and credit, financial services that Fingo promises to deliver to its users; however, it currently offers them cheaper transfer fees, subsidized fees on payment bills, cash back rewards, and other features including payment links and personalized savings plans.
After a pre-seed round of $200,000, Fingo entered YC S21 and raised $4 million in seed funding towards 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 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 the first quarter of this year.
Before giving the green light, the CBK, throughout this time, tried to understand the framework that Fingo and Ecobank had established for their relationship, especially regarding data, transactions and customer interactions. Unlike Nigeria, where collaboration between banks and fintechs is commonplace, allowing the latter group to launch quickly (ultimately contributing to the country having attracted the lion’s share of fintech funding from Africa) , in Kenya it is rare. Fingo claims to be the first neobank in Kenya, so that’s quite understandable when you consider 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 its venture capital raised in the bank because it maintained its 15-person staff and barely had any other expenses besides paying salaries and developing your software. So you’re 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 “in less than 5 minutes”, along with free peer-to-peer transactions and immediate access to multiple services such as savings, financial education and smart spending analysis. the company said in a statement. The fintech says it has acquired a waiting list of 50,000 customers within 24 hours of launch. However, it will have a lot of work to do if the 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 KCB and Equity Bank (who have their digital banking products).
Fingo’s partnership with Ecobank, which claims to have the largest footprint of any bank in Africa, covering more than 30 countries, could provide the scale fintech needs outside of Kenya. Both entities are planning a pan-African deployment, with 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 the youth of Africa 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 profitable transactions, across 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 goal is to reach millions of young people in the more than 33 African markets where Ecobank operates”.