Fintech Kwara was launched in 2019 to help credit unions 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. Kwara is now moving a step further 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. The startup has raised $4 million in a seed round to build a neobank app that will enable individuals to sign up with their preferred credit unions to access various financial services.
This is expected to open new borderless avenues for the lending institutions to sign up new members and help credit unions shift away from tedious paper-based systems and the need for elaborate brick-and-mortar branches. Members using the app, which is set for launch mid next year, will be able to track their personal financial flows from the app too. Kwara said that its existing clients have experienced a membership growth of over 19% year on year, three times the global average, as the loan base of credit unions using its technologies went up 46%, about five times the national average. On its platform, Kwara supported $40 million in transactions between credit unions and their members. 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. This is as the startup continues to perfect its app in readiness for a full launch next year. 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 — a vast majority remain unlicensed.