Kenya-based digital bank for emerging markets Umba has announced a US$2 million seed funding round to help it expand product capabilities.
Currently operating in Kenya and Nigeria, Umba offers a safe, transparent and accessible digital financial service alternative to legacy African banks. The full service digital banking app is bringing the next generation of financial services to the underserved and rapidly emerging market that exists in Africa.
Investors in its US$2 million seed round include Lachy Groom, ex-head of issuing at Stripe, as well as Ludlow Ventures, Frontline Ventures and Act Venture Capital. Umba will use the investment to scale product offerings such as peer-to-peer payments, debit cards, savings and lending to meet the needs of the Nigerian and Kenyan markets.
The startup offers its services through a mobile app where customers have access to a free checking account, free instant peer-to-peer money transfers, lending, deposits, BillPay and cashback. This eliminates the high cost barriers and inconvenient payment processing methods found across traditional banking institutions in African countries that make basic banking inaccessible for millions of people.
“From the outset we built our platform to serve multiple markets, currencies and payment infrastructures. This flexibility is an extremely important consideration as it’s much harder to upgrade your systems at a later date. For example bank and debit card penetration is high in Nigeria, so Umba is deeply integrated into those payment methods, while across Kenya and East Africa mobile money is dominant so our platform is tightly integrated with those services, too. Having a platform that can service those diverse sets of needs is a key reason why Umba can scale up this business fast,” said Umba chief executive officer (CEO) Tiernan Kennedy.
Ludlow Ventures partner Brett DeMarrais highlighted the increase in venture activity in Africa and the opportunities it brought.
“Umba is the first investment we’ve made in the African market and it’s one we were excited to participate in. The team at Umba have an excellent service that drives down the cost of banking for their customers and democratises access. The move away from physical branch infrastructure was already underway and it has accelerated this year,” he said.
“As an investor it’s also very encouraging to see the investment activity that has also increased – from the Jumia IPO to the Visa investment in Interswitch to the acquisitions this year of Paystack, DPO and Sendwave. It’s clear the African market is maturing and that we’re entering a very interesting phase.”