The Kenyan fintech Kwara was launched in 2019 to help credit unions (savings and credit cooperatives societies, SACCOs) in the East African country shift to digital platforms by providing them with its proprietary backend-as-a-service (BaaS) software.
The startup’s trajectory has been steep, as its clientele shot up from two to 50 in just over two years. This is as it became clearer to the country’s cooperative credit unions that they needed more technology to remain competitive.
Through the new round of funding, Kwara seeks to build the next-generation neobank that will give credit union members access to instant loans and third-party services such as insurance, as the startup moves to offer end-to-end solutions to its clients.
Currently, Kwara connects the savings cooperatives with banks, payment gateways and other third parties through an open API.
This comes in one software-as-a-service package, meaning cooperative clients pay for their usage and get a single end-to-end solution.
Already the start-up serves over 60,000 members and handles up to US$40 million in monthly transactions on its platform. With credit union clients in Kenya, South Africa and the Philippines, Kwara is growing its credit union customer base by 40 per cent month-on-month.
Kwara’s new seed round was secured from investors across Africa, Asia, Europe and the United States (US). It was led by Breega, and also includes SoftBank Vision Fund Emerge, Finca Ventures, New General Market Partners, Globivest, Do Good Invest, Rabacap, Launch Africa, Norrsken Impact Accelerator, Future Africa, Samurai Incubate and DOB Equity, as well as several fintech executives, including founders of Meltwater, The Flex Company and ComplyAdvantage, and executives from Salesforce and PayPal.
The round follows rapid sales growth, and comes in advance of the upcoming launch of its neobank app. The startup will use these funds to further develop its app in order to enable credit unions in emerging markets to digitise and bring financial services to millions of people.
“We are building a solution for people – an estimated one billion – who do not currently have access to personalised banking services. This is the result of a gap in banking-grade technology and the lack of neobank-like experiences for the end clients. We’ve been thrilled to see the excitement around the Kwara brand among credit unions and their members, which is fast becoming synonymous with a superior user experience and the future of banking,” said Kwara CEO Cynthia Wandia.
She added, “Thanks to our investors, we will now be able to offer an end-client experience that is 100 times better than what they previously had access to.”
Ben Marrel, founding partner at Breega, said there was increasing interest in how to build wealth through community, as well as a shift in consumer preferences towards digital-first banking.
“Kwara’s unique approach is a catalyst for a new way of retail banking through digital-first credit unions. We are both proud and excited to be helping this outstanding team scale across Africa and other emerging markets,” he said.
Credit unions are usually formed by people with a common interest or members of an industry, like farmers or teachers, who buy shares in the institution, save money and take loans.
They are popular in Kenya owing to their low-interest-rate loans and ease in accessing credit when compared to conventional banks. About 175 credit unions are licensed in Kenya to serve nearly 4.1 million members countrywide.
Kwara has also started forging alliances with companies, to offer third-party services on its app. The startup recently partnered with Lami Technologies, a Kenyan-based digital insurance company, to make accessible a wide range of insurance products including health, property, business and life covers on the app.
About a week ago, Kwara also partnered with Workpay, a HR Solution platform to to offer Savings and Credit Co-operative Societies (SACCOs) in Kenya with human resource management and payroll processing solutions.
The partnership will enable SACCOs to automate their Human Resource (HR) processes as a complimentary service to Kwara’s products i.e Core Banking, Online and Mobile Banking and Open API service.