After acquiring a majority shareholding in Daraja Microfinance Bank, Umba can now offer full banking services in Kenya, including current accounts insured by the Kenya Deposit Insurance Corporation (KDIC), interest-bearing savings accounts, fixed deposit accounts, lending, and payments. Umba offers a growing range of banking services to their customers, which include consumers and SMEs, who are largely underserved by legacy brick and mortar banks. Umba has two major advantages over legacy banks, it is not supporting an expensive branch network and also develops its technology in-house, freeing the Company of large licensing fees that banks typically pass on to their customers in the form of account fees. With Umba every product is available within the App, including account opening and customer support.
The Kenyan banking sector is one that has been resistant to change, despite being a world leader in digital payments, being the home of M-Pesa, which launched in 2007, it still has a small footprint in digital banking compared to other markets. Nigeria has almost 900 licensed microfinance banks, a number of which have been digitized, however Kenya has just 13, with almost all running traditional branch operations. This opens up a large opportunity for Umba, who has been proving its ability to scale in Nigeria with a growing number of customers and products, which will enable it to achieve a large market share quickly in Kenya.
Umba has strong backing from leading Fintech investors, including Costanoa Ventures, who led their Series A, Lachy Groom, Lux Capital and Palm Drive Capital as well as strategic angels such as Monzo founder Tom Blomfield and executives from NuBank (the largest digital bank in the world). Chandaria Capital, who are the investment arm of Chandaria Industries, one of the largest FMCG distributors in Kenya are also a backer who strongly supported the Kenya launch.
Umba CEO, Tiernan Kennedy, commented, “It’s a fantastic opportunity we have been given to bring Umba to the Kenyan market. It’s been an extremely challenging and lengthy process to make this acquisition but the ability to stand on our own two feet and grow the bank into a serious player in the market is absolutely worth it. We’re very thankful to the Central Bank, the shareholders at Daraja and our market expansion team at Umba for making this happen. Kenya needs a great digital bank to offer the services that customers want, without the massive fees they have been paying to the legacy players. The winners here will be who provides the best services and we’re confident in our Team’s ability to deliver.”
Umba CFO, Barry O’Mahony, commented, “We couldn’t be happier to close this transaction. So many of us have worked incredibly hard over the past two years to make this happen. Looking forward, we see great things happening in the Kenyan market from a variety of young disruptive technology startups. I feel the next few years are going to see some great new businesses be created on the continent and we are beyond excited to bring fresh, innovative new ways for businesses and consumers to bank to the Kenyan market.”
Umba has recently strengthened their leadership team through the additions of Peter O’Toole and Dan Watts. Peter is an experienced CFO and financial services expert, with 30+ years experience in leadership positions. He has lived and worked in Africa for the past 12 years, where he was Group CFO of Interswitch (Africa’s first unicorn) and CFO of Renmoney. Dan has spent the past 10 years building innovative and sustainable lending programmes with banks and Fintechs across Africa, in his role of Chief Credit Risk Officer at both Renmoney and Carbon.
“We’re delighted to see Umba launch in Kenya. We invested with the knowledge that they had a unique entry point into the Kenyan market, as well as a strong business in Nigeria. We believe that Umba bring a really strong offering to consumers and businesses. The team has been shipping value to their customers month over month and the result is an excellent product. Going from one country to two can be a big challenge, but the opportunity is huge when executed well. We’re excited to continue supporting this Team and this market opportunity.”
– Mark Selcow, Costanoa Ventures
