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Top African Challenger Banks Helping the Unbanked Through Mobile Services

Africa is one of the most diverse continents on the planet, with a multitude of different countries, cultures and economies – all at various stages of economic development. This provides a great backdrop for fintech, with the financial technology ecosystem in Africa always being one to watch.

The banking sector is no different, and with challenger banks leading the way in innovation and helpful services for their customers, they are aiding in the current problem of tackling financial inclusion. Around 57% of the population of Africa, around 95 million people, do not have a traditional bank account. This high number of unbanked people undoubtedly causes problems, as there are limited economic options to serve its citizens.

However, like with many fintech scenarios, part of the answer comes from smartphones. African mobile phone penetration is high, and sub-Saharan Africa is the worlds fastest growing mobile phone market. There are 747 million Sim connections in sub-Saharan Africa, representing 75% of the population, with smartphone sales in Africa representing 6.6% of the global market.

With this in mind, challenger banks and neobanks are perfectly poised to help the nations underserved communities achieve financial inclusion. Neobanking is particularly popular in Africa, as is fintech in general, as it offers customers multiple services and features that were previously inaccessible, such as sending money to family and digital lending.

Here are some of the challenger bank offerings available to African consumers:

TymeBank

TymeBank fully launched in February 2019 as a completely branchless banking platform hosted in the cloud. It recently reached its 3 million customer milestone, after consistently onboarding between 100,000 and 120,000 customers each month.

Based in Johannesburg, the digital bank offers its “EveryDay Account”, with a visa debit card and no monthly fees. It has also launched Max, an AI-powered assistant that helps customers learn about personal finance.

“TymeBank’s hybrid model of digital banking and physical service points is what sets us apart. In a country where banking fees and data costs are high and the levels of digital and financial literacy are low, we have re-imagined digital banking to make it accessible to all South Africans across the economic spectrum,” said CEO Tauriq Keraan

“While our technology allows for exponential customer growth, our priority is to broaden our offering to include innovative credit and insurance products plus a variety of value-added services. We want to continue broadening access to banking for the benefit of the country’s consumers.”

Kuda

Kuda is based in Nigeria and is a mobile-first challenger bank, considered to be at the forefront of the African challenger bank scene. Their flagship product is a digital-only savings account, and customers are able to save and spend money requesting a debit card through the app. They offer free withdrawals at ATM’s across Nigeria and customers get 25 free transfers to other banks every month.

The bank has a microfinance banking license from the central bank of Nigeria and has over one million downloads on Playstore.

It also recently raised $25 million in a Series A funding round led by Valar Ventures and has now raised a total of $36.6million in two years after a $10million raise in November 2020 that was reportedly the largest seed round by an African start-up.

Babs Ogundeyi, Kuda’s co-founder and CEO, said they want to bank every African on the planet, with Ryan Laubscher, the COO, advising they will achieve this by “blowing customers away” with unparalleled customer service.

Bank Zero

Bank Zero is a mobile-driven, 45% black-owned and 20% women-owned digital mutual bank in South Africa. Founded by former senior executives from First National Bank, it plans to focus on the savings market for individuals and businesses.

The “Zero” in their name refers to the fact they will not charge monthly bank account fees. It also features patented credit cards which it says will protect customers against skimming and is also working with Mastercard to develop a “new generation of card” to deliver security and other features.

Though originally planning to launch fully in 2019, their plans were delayed, with the complications of the Covid-19 pandemic making it difficult due to staff working from home. The bank now plans to launch by the end of June 2021, though has already soft-launched for a group of individual and corporate clients.

Discovery Bank

Discovery is a well-established South African financial and insurance services group. The financial services company was founded in 1992, with Discovery bank launched in 2019, welcoming its first customers as the “worlds first behavioural bank”. The behavioural model is used by the bank to reward its customers for their lifestyle choices. Things such as managing their money well, eating healthily and staying fit gives them rewards that can be monetised, earned or spent at discovery’s partners.

“We operate in a landscape that now, more than ever, demands innovation and digitisation, but also purpose and being an active partner in the lives of modern consumers,” said Discovery Bank CEO Hylton Kallner.

“These improved behaviours allow Discovery Bank to assess risk as something changing over time based on engagement in the artificial intelligence-powered Vitality Money tool. The outcome is that our clients experience greater financial wellbeing, it reduces the risk of defaults for Discovery Bank, making the business more sustainable, and it addresses large-scale challenges, such as increased savings, that benefits society.”

The bank is one of the countries fastest growing banks in terms of deposits, taking over R6.3billion retail deposits since launching.

Bettr Finance

Another one for South Africa, Bettr Finance was founded in 2015 by Tobie van Zyl, Andrzej Stempowski and Angus Brown. It offers an alternative banking service for everyday transactional use, offering low-cost accounts and an app powered by a debit card.

The bank plans to launch this year, gaining a growing community of 6500 users via its WhatsApp based sign-up list, targeting younger consumers between 16-35. Bettr is not a fully licensed bank and will be relying on a sponsor bank to negate the need for a license, ultimately keeping costs down for users.

“We remain a tech company that does banking – we don’t want to be bombarded by excessive regulations, though we will of course be compliant.”

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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