Digital Banking Platform Umba Raises $15 Million In Series A Funding to Push Its Expansion Into Three African Markets

If there’s one thing about the continent of Africa that’s a big fact, it houses an almost infinite amount of opportunities for startups, especially for fintechs. Africa has underbanked and unbanked people in millions, and the presence of digital banks and fintechs focused on the aforementioned people is helping to narrow the continent’s financial gap. Africa as a continent is seeing increasing growth in the adoption and usage of smartphones and their complementary banking options being provided by fintechs. Thanks to these fintechs, people irrespective of who they are and where they are from, can gain access to financial services.

Umba, a digital banking platform focused on the underbanked and unbanked population, has raised $15 million in its Series A financing round. The startup was founded in 2018 by Tiernan Kennedy and Barry O’ Mahony.

The investment was received from some of Nubank’s executives alongside other investors including Tom Blomfield, the co-founder of Monzo, Lachy Groom, ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital and Streamlined Ventures. The round was, however, led by VC firm Costanoa Ventures.

The round comes about two years after Umba raised its seed of $2 million, and brings the total funding raised by the company to $17.5 million.

The startup claims to bring a much better range of financial products to the underserved people in the continent is not only an accessible way but also a transparent way too. Umba offers free bank accounts, inter-bak transfers, bill payments, etc., and is much like its rivals Kuda, FairMoney, etc. In other words, it offers standard financial services that digital banking platforms are expected to offer.

According to the startup’s CEO, Umba operates a credit-led. Therefore, apart from the aforementioned credit facilities, the startup provides loan services. It uses proprietary data generated by users to offer these loan offers and it makes most of its revenue from charging a monthly interest of 10 percent.

CEO Tiernan Kennedy said that “I’d like to think that we’re the cheapest in the market. The reason is we’re collecting data, making automated underwriting and retraining models every month based on customer performance to deliver credit in seconds. Also, we’re best in class in terms of lending, which allows us to offer the lowest interest rates in the markets.”

Speaking on the investment from some of Nubank’s executives, the CEO said that “The Nubank guys saw what we’re doing and recognized it is the right model for emerging markets. Credit is the hardest problem to solve and to underwrite customers at scale in multiple markets is challenging. It took us 18 months to build that. But now it’s up and running and performing.”

Umba claims to have doubled its revenues every three months since it launched and has seen more than a million downloads on Google Play Store – the major app store for android users.

The new funding will see Umba expand to three new markets – Egypt, Ghana and Kenya. These countries are seeing an increased demand for digital banking services like Umba’s. The startup will also be hiring new talents in these new markets.