The pan-African financial institution Ecobank Kenya, in partnership with Y Combinator-backed Kenyan startup Fingo, has launched a neobank.
The bank was launched at an event attended by the country’s president, William Ruto.
The Ecobank subsidiary reportedly launched the neobank, the first of its kind in the East African country.
Fingo is a Kenyan company founded in January 2021 by CEO Kiiru Muhoya and his co-founders James da Costa, Ian Njuguna, and Gitari Tirima to meet the growing demand for financial services among Africa’s young people, who are the youngest in the world but also among the most financially disadvantaged.
Opening an account can be a time-consuming process for young individuals in Africa, requiring many in-person meetings and the presentation of real paper documentation. They have to spend a lot of time and effort in order to make money and retain their reputation. Fingo users are still having trouble gaining access to the savings, insurance, and credit services the company has promised them. In the meantime, the company is trying to entice them with lower transfer fees, subsidised bill-paying rates, cash-back rewards, and other features, such as payment links and individualised savings plans.
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Fingo Partnership With Ecobank
Fingo received $4 million in seed funding after a $200,000 pre-seed round and acceptance into YC S21. The round was led by a multistage VC firm called HOF Capital and included investors such as the co-founders of Monzo and Twitch as well as executives from Google, Facebook, and Paytm. Other investors included Goodwater Capital, Launch Africa, Chandaria Capital, Naiban (Nairobi Angel Network), Discovery Ventures, and Chui Ventures. As a result, Fingo and Ecobank signed a partnership agreement, and the two companies began merging their respective software systems in preparation for a debut, perhaps in the first quarter of this year, after receiving regulatory approval from the Central Bank of Kenya (CBK).
The CBK spent a considerable amount of time trying to grasp the data, transaction, and consumer interaction structure Fingo and Ecobank had established prior to approving the partnership. Collaborative efforts between banks and fintechs are uncommon in Kenya, in contrast to Nigeria, where they are frequent and allow fintechs to launch quickly (ultimately contributing to why Nigeria has garnered most of Africa’s fintech funding). Fingo says it was the first Kenyan neobank, which is plausible given how long it took to gain regulatory clearance and enter the market.
Muhoya also mentioned on the call that the fintech has been able to keep its 15-person staff and incur minimal expenses aside from salary and software development despite the delay, meaning that the majority of the venture funding it raised is still available. That means it isn’t trying to attract investors in order to fund expansion, certainly not in the present climate.
About The Fingo App
Fingo Africa app users will soon be able to open a bank account “under 5 minutes,” make free peer-to-peer transactions, and gain instantaneous access to a variety of services, including savings, financial education, and smart spending analytics, thanks to the newly approved partnership. The financial technology company claims that within 24 hours of its introduction, it has amassed 10,000 active users and a waitlist of 100,000 consumers. If the goal is to sign up millions of customers, however, it will face stiff competition from mobile money services like Safaricom’s M-Pesa and traditional banks like KCB and Equity Bank, both of which provide digital banking options.
More On The Collaboration
Ecobank, which operates in more than 30 African nations, claims to have the largest presence of any African bank, and a deal with Fingo might give the fintech the scale it needs to expand beyond Kenya. According to Muhoya, both organisations are working towards a Pan-African rollout, with plans to reach the remainder of East Africa by the year’s end. Finclusion and Koa are digital banking alternatives that service customers in that area.
“Our collaboration with Fingo Africa marks a major step towards our goal of providing young people in Africa with the fundamental financial skills they need to build bright futures for themselves. “Together, we will launch youth-focused financial products across Ecobank’s pan-African footprint,” said Diallo Djiba, senior fintech advisor for Ecobank Group, in a press release. We’re thrilled to be on the cutting edge of banking for Africa’s young by expanding the reach of our current solutions through this relationship. Our goal is to connect with young people in the 33+ African countries where Ecobank is present.