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Nigerian fintech startup Bankly closes $2 million seed round

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Bankly, a Nigerian fintech startup digitizing cash for the unbanked, announced that it has closed a $2 million seed round. 

The startup digitizes financial services for people in the informal sector, usually small-scale traders who save through rotating savings and credit associations, colloquially known as “ajo” or “esusu” in Nigeria. 

In the absence of a banking system nearby or a disregard for one, the unbanked resort to these traditional systems because they work completely offline. The system allows them to collate and save cash with a thrift collector responsible for disbursing funds when due.

Over the past 18 months, the company has been building out its distribution and agent networks. Here, customers can deposit and withdraw cash with a Bankly agent any time. This solves the issue of access as there are thousands of agents in these cash-dependent communities.

When the information of this new set of customers is collected and saved on its platform, Bankly starts to build engaging communities where these people can collectively save their income with the agents. Slowly, an online banking presence is built for them.

With most of their money in a bank and little or no cash to buy airtime or make payments, they would frequently opt to access these services online via their mobile phones.

Bankly operates like a traditional bank but with fewer assets, revenue, customers and operational costs. But because it doesn’t spend a lot in acquiring customers and building physical presences, it can pass on those cost savings to customers as interests and still make decent margins.

Agents on the platform also take commissions for any transaction a customer makes through them. This time last year, the company had a little over 2,000 agents across the country. Now, that number has grown to 15,000.

The company still plans to add more agents with the new investment received. To increase its 35,000 customer base in cash-dependent communities, Bankly will also provide direct-to-consumer products in the coming months.

Source: TechCrunch

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