The best digital banking platforms of Africa often come from growing, populated markets resembling Nigeria, South Africa and Egypt. But Affinity AfricaA supporter from Ghana would really like to hitch the conversation. The startup has collected seed financing of 8 million US dollars to further expand its financial products across the country, where mobile money is the dominant financial instrument.
While mobile money has turn into a contact point for financial transactions, the normal banking sector in Ghana and Africa stays highly profitable. Banks in Ghana have had since pandemic Recorded growth with a Equity return after taxes (ROE) that exceed the worldwide average.
However, these profits are based heavily on fees, while inefficiencies resembling high operating costs, extensive personal paperwork and long times within the board of thousands and thousands are underestimated.
Nowadays, lower than 10% of firms in Africa have access to credit, and over 60% of adults are missing formal financial services by World Bank data. This growing gap has fueled the demand for alternatives for digital banking resembling affinity that supply a less expensive, more integrative model.
Affinity has brought greater than 50,000 customers on board since her start last October, the founder and CEO Maugana Tarek says. Remarkably, 65% of users had never previously accessed formal bank products, and over 60% women work within the informal sector.
Why did it take so long for a digital banking business to get such a traction in Ghana? The country’s strict bank regulations play a serious role. In contrast to neighboring Nigeria, wherein digital banks can easily work with microfinance licenses, such licenses are rare, expensive and time to get in Ghana, which makes it difficult for Fintech to get into the room.
“Ghana’s regulatory authority focuses on protecting consumers, especially in deposit facilities,” Mouganie told Techcrunch. “We needed to prove strong risk management, break out as a microfinance institution and align our mission with the aim of the federal government to banish unauthorized individuals. What ultimately convinced it was how our digital platform reduces friction and lowers banking costs for people and micro, small and medium-sized firms (MSMES). “
From investment banking to fintech disruptor
Mouganie, which comes from a fourth generation of a Ghanaian family, studied Lebanese descent, studied in Great Britain and received a bachelor and a doctorate before starting his profession in science and financing. He later worked as a director at Man Group, a worldwide investment fund of $ 160 billion. There he worked on large stock markets, including Visa and Compartamos, Latin America’s largest microfinance institution.
After Mouganie returned to Ghana ten years ago after ten years ago, he wanted to resolve the issue of economic inclusion in Africa, a challenge that was often emphasized in global advisory reports.
“Numbers like Africa’s 331 billion dollars are still quoted today,” he said. “Nothing has really modified. This made me possessed to construct a full retail bank for MSMES, just like Santander, Lloyds or Chase Bank in Europe and the U.S. but tailored to nearly all of Africa. “
He and a bunch of friends and members of the family collected 2 million US dollars to accumulate a microfinanzbank in 2020. They contained money from the sale of his London house, he claims. The company, which received a savings and loan license, which was first granted in over 10 years, served as test grounds for its current bank solutions.
By 2022, Affinity collected one other $ 3 million in a prepared round to enhance this license. After months of stealth tests, the Fintech officially began its app in October last October after approval of the Bank of Ghana, the country’s APEX Bank.
The Ghanaian FinTech serves each individuals and micro developments, which are sometimes not distinguished in Africa. Customers receive free savings and checking accounts without transaction limits, and the platform immediately begins the loan procurement users based on their transaction.
After a couple of months of use, Affinity extends credit lines with monthly rates of interest of 3-7%. The Fintech, based in ACCRA, has paid off loans of over $ 15 million in various products, with fast loans rising by 30% monthly by 30% and a non-powerful loan rate (NPL) of three%.
A hybrid approach: digital banking with a physical note
Customers may access other banking services, including savings, payments, investments and transfers to banks and wallets. Last month, 89% of the deposit inflows which have grown by 54% since its introduction got here from mobile money charges, whereby the remaining 11% of bank transfers have renown.
Loans make up over 90% of affinity sales. The remaining 10% come from fees and commissions for services resembling pension calculation and web payments via USSD and the mobile app. According to Mouganie, sales have increased by 37% monthly up to now six months.
Like many digital banks in Africa, Affinity Online Banking combines offline touchpoints via the Agent Network. These agents, around 30 of them, meet small firms personally, to the app on board and help to bridge the gap in trust for first digital banking users.
Of its 50,000 customers, 26,000 have joined the agency network and registered 24,000 with the mobile app. Remarkably, 55% of the purchasers acquired by Agent have passed into the app and have indicated a powerful digital acceptance in keeping with the institution.
“This shift has prompted us to rethink our agency strategy – and to advertise using agents for onboarding, initial training and digital competence with a purpose to promote the app adoption. We stay up for refining this hybrid growth approach while we scale, ”said Mounie.
The 8 million dollar -sowing round of Affinity was cited by the European VC firms Grazia Equity (Germany) and the Backed VC (London) and marked their first African investments. Other investors are Enza Capital, Launch Africa, Renew Capital, Finca International, Attijariwafa Ventures, Impact Assets, who joined Eldon Capital as Early Backer.
“At Backed we are founders and couldn’t imagine a better person to build the African local bank than Tarek,” said Andre de Haes, founder and managing partner at Backed. “He began his profession through the financial crisis in 2008 in banks, became an authority in regulation and strategy and has built up a primary -class banking stack for affinity. His ability to mix and understand customers has driven impressive early user numbers. “
