Nigeria’s Umba Begins Operations in Kenya Making it the Second Licensed Digital Bank in Kenya

Umba, a fintech company that started operations in Nigeria, has recently launched its services in Kenya providing an opportunity for the firm to expand its market share.

Umba’s introduction to the Kenyan market is a result of its purchase of a controlling stake in Daraja Microfinance Bank which grants the company authorization to provide complete banking solutions in Kenya which includes:

• Opening and operating current accounts
• Opening and operating interest-bearing savings accounts
• Opening and operating fixed deposit accounts
• Offering lending and payments services

According to Umba executives, this milestone follows a lengthy period of work to complete the acquisition of Daraja Microfinance.

Founded by 2 Irishmen, Tiernan Kennedy and Barry O’Mahony, Umba offers a transparent and accessible digital financial service alternative to legacy African banks.

The company sees Kenya as a country with a huge market potential with a rapidly expanding youthful population. An opportunity is seen in Kenya which is thought to be significantly neglected by the latest generation of fintech firms and physical banks due to the more rigorous licensing regulations in place.

“To give an example, there’s like 600+ microfinance bank licenses in Nigeria; there’s 13 in Kenya,” explained Mr Kennedy, CEO, Umba.

“We’ve got one of the 13 for the entire country. And there’s only one other player doing digital, so it’s a huge opportunity. It’s basically a market that’s been locked out. This allows us to compete heavily in the market.”

Umba’s distinct advantage is that it can provide services to its customers without the financial burden of a traditional branch network. Additionally, it designs its own software, thereby avoiding the requirement to pay substantial licensing fees to financial institutions, and offers account registration and customer assistance within its own application.

“Looking forward, we see great things happening in the Kenyan market from a variety of young disruptive technology start-ups,” said Umba’s Chief Financial Officer, Mr O’Mahony.

“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 raised $18 million in funding to date backed by fintech investors such as:

• Costanoa Ventures
• Lachy Groom
• Lux Capital and
• Palm Drive Capital

along with a number of angel investors.

In April 2022, the startup announced a $15 million Series A round and the intention to expand to Kenya, Egypt and Ghana.

“We invested with the knowledge that they had a unique entry point into the Kenyan market, as well as a strong business in Nigeria,” said Mark Selcow, Costanoa Ventures.

“We believe that Umba brings 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.”

Umba’s expansion into the Kenyan market has seen the entrance of Chandaria Capital as one of its local investors.