Kwara, a Kenyan fintech digitizing credit unions (saccos), more than doubled its customer base last year and foresees tremendous growth in the coming years after raising an initial extension of $3 million and signing a deal. exclusive distribution of digital solutions with Kenya Union. of Savings and Credit Cooperatives (Kuscco), the national umbrella body that represents saccos.
Following the partnership with Kuscco, Kwara said he gained connections with a group of more than 4,000 saccos for his banking-as-a-service product. As part of the exclusive deal, Kwara will also acquire Kuscco’s subsidiary IRNET, a bag provider and software company, for an undisclosed amount.
Kwara says the Kuscco deal comes at the right time in his plan to step up efforts in Kenya.
“We believe that we have barely scratched the surface in the Kenyan market. So we’re going to really invest in products and services that deepen our relationship here,” Kwara co-founder and CEO Cynthia Wandia told TechCrunch.
“The reason (for the agreement) is clear, first it is an opportunity to generate leads and distribute our core product as quickly as to deepen our competitive moat. We are entering an exclusive partnership, which also means that no other tech company will be able to trade with Kuscco. They are betting on us, but we have been able to show that we can do it as we continue to grow,” said Wandia, who co-founded the fintech with David Hwan (COO) in 2019.
The seed extension round saw participation from existing investors DOB Equity, Globivest and Willard Ahdritz, the founder of Kobalt Music. New backers One Day Yes, Base Capital, as well as fintech executives including Mikko Salovaara, CFO of Revolut, also joined the round. The new funding brings the total initial amount raised by the startup to $7 million. The initial round saw the participation of several investors, including Breega, SoftBank Vision Fund Emerge, Finca Ventures, New General Market Partners.
Kwara, which also has a presence in South Africa and the Philippines, has grown its customer base from 50 to 120 by the end of 2021, maintaining 100% customer retention, proof of the value it delivers to its customers. The automated onboarding process, the startup says, has ensured client success and growth.
Kwara’s product improves credit unions’ back-office operations, helping them move away from tedious paper-based processes and physical branches, and opens up new avenues for them to enroll new members and create novel products.
The company also has a next-generation neobank app that gives members of associated credit unions access to additional services such as instant loans and third-party services such as insurance. He said the user base of the neobank app, which also allows users to deposit money directly into their sacco accounts and track their finances and payments, has grown 35-fold since its launch last year.
The fintech plans to add more features to cater to sacks, and also additional products for users of the neobank app.
“We keep sending more or less enterprise grade features for the big saccos that are well capitalized, the ones that are the same size and level as some of the banks. There are specific features that they need and specific ways that they need to be taken care of, so we will continue to invest in that,” Wandia said, adding that Kwara is also investing in improving the neobanking experience. They are set to add more features that will help members create “a personalized view of their own goals and really start working towards them.” They will also sign more partnerships with third parties to add more value to the users of the app.
“We believe that any time a sacco member leaves their sacco for another service simply because sacco doesn’t provide it, it’s a missed opportunity for that member to actually benefit from returns on that product. All income earned from those products actually goes back to members as dividends,” she added.
Credit unions are made up of people with a common interest or members of an industry, such as farmers or teachers, who buy shares in the institution, save money, and take out loans. They are especially popular in developing regions due to their low interest rate loans and ease of accessing credit compared to conventional banks. In Kenya, only 175 deposit-taking sacs are licensed, as the vast majority remain unregulated.