Nigeria-based credit-led neobank FairMoney, which aims to give underbanked people access to digital financial services, is pursuing an emerging markets strategy and recently launched in India.
Founded by Laurin Hainy, Nico Berthozat and Matthieu Gendreau, FairMoney is using loans as a launching pad for its future bank accounts. Its artificial intelligence (AI)-based platform disburses loans to users in seconds, without any human intervention.
By building this automated process, and with a focus on very large countries like Nigeria and India, FairMoney already has close to 1.5 million users across the two markets, and hopes to keep the same fast growth pace.
Hainy is a Nigerian and German dual national, and knew from time spent in Nigeria that lack of financial inclusion was a hurdle to the development of the economy, as well as of the great entrepreneurial mindset he had found there.
“Banks stayed apart from this untapped market because of the lack of digital tech expertise to serve people with limited revenues in remote areas,” he said. Together with Berthozat and Gendreau, and backed by LeStudio, Hainy decided to create a neobank to tackle the needs of entrepreneurs and individuals in emerging markets.
“We leverage the digital technologies to offer financial services to people, even for very small transactions and loans, in remote areas,” he said.
There are also other digital banks in the market, like Kuda, or credit-led digital banks like Carbon, but Hainy believes FairMoney is extremely competitive given its approach and high growth rates.
“We’re close to four million downloads,” he said. “We hit a US$93 million disbursement volume in 2020, despite COVID-19 which impacted lending businesses.”
FairMoney is also well-funded, having raised a total of US$14 million through three equity rounds since the creation of the company in 2017. Investors include Flourish Ventures and DST Global, and Hainy is optimistic that the startup will continue to grow quickly.
“We have 1.3 million KYC-verified users so far in Nigeria, and close to 100,000 users in India.
We disburse one loan every 10 seconds today. We will hit the US$100m lending disbursement landmark in 2021, and the US$300 million disbursement landmark as well!” he said.
Having expanded to India, it is a case of so far, so good.
“We were really impressed by the traction we got in India. Within six months, with a US$0 marketing budget, we got up to 100,000 users who went to FairMoney and verified their identity in the app. We had never expected this traction and had to cancel the marketing budget planned to acquire those users… It shows how relevant and useful our product is for the Indian market as well,” said Hainy.
For now, FairMoney, which makes revenues through a small margin it collects from its loans and through commissions paid by service providers, is focused on its existing markets.
“We want to focus on those countries over the next year with one goal in mind – becoming the leading digital bank in Nigeria and one of the largest digital lenders in India, a country with massive opportunities,” said Hainy.