Digital financial services are key to the future of Africa’s banking sector. Africa is home to approximately 1.000 startups, an estimated half of which are tech.
Moreover, Africa is home to more digital financial services deployments than any other region in the world, with almost half of the nearly 700 million individual users worldwide.
Data from Disrupt Africa shows that so far, over 300 African tech startups have raised more than $1.1 billion combined, in 2021, the first time the sector has broken the $1 billion mark by August.
However, this year, a new wave of fintech leaders is roaring, attracting investors’ interest for their potential.
Let’s meet the Top 4 African “soonicorns”. Guess what: all of them are fintechs.
1. TymeBank: 130,000 customers a month in South Africa
TymeBank is a digital-only retail bank based in South Africa.
The Prudential Authority of the South African Reserve Bank (SARB), granted permission for TymeBank to operate exclusively online on 28 September 2017 and, since its official launch in February 2019, the bank has seen rapid rapid growth employing a successful strategy to sign up customers through kiosks at Pick n Pay and other retail stores.
The bank has also seen success in targeting relatively untapped markets, including a partnership with the Zion Christian Church (ZCC).
Users are able to operate TymeBank accounts like regular bank accounts. They are able to pay bills, transact online and in-store with the debit card provided to them, as well as send and receive money.
Users can also save money with Tymebank’s savings tool –GoalSave — and get as much as 10% interest.
Subscribing is easy. Tymebank does not require any documents and is free.
Users would only need to log on the company’s website and provide a valid South African ID number and a cellphone number, which the bank verifies with a One-time PIN (OTP).
And TymeBank is sustaining the momentum of acquiring about 130,000 customers per month. The bank is also making headway in increasing the number of customers with active accounts, which has proved to be challenging, given a tough economic environment with added pressure on consumers.
Moreover, this year, weeks later after launching its first credit card, TymeBank is now into medical insurance, selling primary healthcare insurance with a new product called TymeHealth.
2. TeamApt, Nigeria’s largest agency banking operator
With its 14 million monthly users and 72 million transactions carried out monthly, as well as a 100% month-on-month growth rate in transaction value from $2bn to $4bn, TeamApt is Nigeria’s largest agency banking operator, according to Shared Agent Network Expansion Facilities (SANEF), the regulatory body for agency banking in the country.
However, the fintech is only at the beginning of its journey. After a successful run with infrastructure for banks, TeamApt transitioned into agency banking.
Last year TeamApt received several investments from companies, which also included Novastar Ventures, FMO, Global Ventures as well as local investors in Africa. In 2019, the company’s Series A round, led by Quantum Capital Partners, was at $5.5m.
As stated by TeamApt, the funding rounds will help provide digital bank services for the unbanked, as it seeks to expand to other African countries, including Cameroon, Egypt and Ghana, by the second quarter of 2022.
The plan is already ongoing. TeamApt is ready to become a Pan-Africa fintech, the largest digital bank in the continent, offering financial services products tailored to meet the needs of the over 350 million underserved mass market, using technology and low-cost offline distribution models. This includes micropayments, savings, lending, insurance, pensions.
3. Yoco, the fintech that helps small businesses get paid
Yoco is an African technology company that builds tools and services to help small businesses get paid, run their businesses better, and grow. Since launching in 2013, South African fintech has positioned itself as the go-to platform to access offline payments among merchants.
As Yoco grew exponentially in providing offline payments, it built an online offering. After being in beta for a while, the rollout came right on time, some days into South Africa’s lockdown in March last year. This way, South African merchants could continue accepting payments on the platform.
The fintech is looking to expand its services into other aspects of digital payments.
The first step is mobile money, QR payments and electronic funds transfer (ETF) as offerings in its pipeline. However, the company is still very much a card-focused payment provider and didn’t yet provide any update concerning its future plans.
With over 6 million small businesses that still transact only in cash in South Africa, this provides a huge opportunity for Yoco.
The company claims to be processing more than $1 billion in card payments per year, and in its six years of existence, it has processed over $2 billion in card payments. With such interesting data, it is not a surprise that foreign investors believe in Yoco.
The fintech has raised a total of $107 million. As stated by Techcrunch, the company’s Series C investment is the largest of its kind in South Africa and one of the largest for any African fintech (third only to Flutterwave and Chipper Cash), making Yoco one of the most valuable startups on the continent.
4. Kuda, form lending platform to Nigeria’s first mobile-only bank
A few years ago, a small team determined to transform banking launched a savings app for Nigerians, and that app was the first step toward the company that today’s called Kuda.
Launched in 2016, as lending platform Kudimoney, Kuda rebranded in June 2019 and received a banking licence from the Central Bank of Nigeria (CBN) to launch a full service digital bank, making Kuda Nigeria’s first mobile-only bank licensed by the country's authority.
The company provides a mobile-first, full-service bank platform designed to assist consumers in smartly budgeting, saving and spending, and it is currently licensed for microfinance and mobile banking services.
The company claims more than 2 million customers.
In August 2021, Kuda raised a US$55 million Series B funding round at a US$500 million valuation.
The funds raised through its London entity would be used to expand its Nigerian operations and prepare for its launch in other African countries. Consistent in an upward trajectory since the outbreak of the COVID-19 pandemic, the bank has grown its credits through aggressive marketing and an improved banking app, such that enables its customers to get 25 free transfers to other banks every month.
However, the company's main market is still Nigeria. Last autumn, Kuda, with the aim to promote cashless payment across Nigerians, decided to deliver free debit cards without maintenance fees.
Kuda’s proposition of zero fees on cards, account maintenance and transfers as well as its low-interest credit offering delivered conveniently through smartphones and the web have made it particularly attractive to millennials.
