Kuda Bank Conquers New Fronts, Acquires Digital Banking License in Pakistan

Kuda Bank

Nigerian-owned fintech platform are starting to spread their tents through the length and breadth of the world, earlier, BrandSpur Nigeria reported on Flutterwave’s interest in acquiring British fintech platform, Railsr and now another Nigeria-owned digital banking platform Kuda is set to power digital banking services in Pakistan by acquiring digital banking license from the State Bank of Pakistan (SBP).

This venture which would see Kuda Bank acquire the license to operate digital banking services in Pakistan is a joint venture between Kuda and two leading Pakistani companies, which places Kuda Bank as one of the five companies to receive a digital banking license in Pakistan. Kuda Bank which succeeded in acquiring this license as well as four other banks out of the 15 other banks that applied for the license, including Pakistani commercial banks is set to be an agent to pioneer this solution in the South Asian country.

In line with the recent increase in digital and more inclusive financial solutions, central banks have begun creating frameworks and regulations which would further optimize their country’s market and place proper regulatory control on digital banks within their country’s border to protect their citizens. One of such is the new categories of license for payment systems released by Nigeria’s Apex bank CBN, which indicates a six-month observation period between the issuance of an approval-in-principle and the license to operate as a payment solution provider.

So also the Central Bank of Pakistan, issued a new licensing regulation in January 2022, for digital banks. Which gives rise to financial inclusion, as well as five other licenses according to the SBP.  This new set of regulations which seem to vary in use, however mandatory to be gotten, took out mega digital banks like Sequoia-backed Dbank, South Africa’s Tyme Bank, and Pakistan, home-based bank Finja from the race to operate digital banking systems in the country.

However, Kuda Bank was strategic in its approach, The digital banking platform had earlier partnered with two leading Pakistani institutions in June 2022; Fatima Group and The City School Group before it made its request for the SBP license. The City School Group, which owns the largest private school networks in Asia region, and Fatima Group, is a conglomerate of companies that have subsidiaries that offer exclusive solutions in certain sectors like energy, agricultural manufacturing, and trading.

Kuda’s Chief Expansion Officer, Mr. Ryan Laubscher spoke about the partnership, saying “The company’s [Kuda’s] partnership with Fatima Group and The City School Group leverages each partner’s unique reach and capabilities to create a powerful proposition with enormous potential to increase financial access and affordability in Pakistan, and most notably, with a focus on the agriculture and education sectors.” to which he maintained that its Kuda’s priority to provide easy and affordable banking which improves its partners’ inclusion focused initiatives in the country.

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Pakistani local sources also disclosed that all the applicants who applied for the digital banking license were examined on the following key areas, which include fitness and propriety, experience and financial capability, a business plan which includes, implementation plans, funding, and capital plan, security; IT and cybersecurity strategy and outsourcing strategy. The selected five are mandated to incorporate a public limited company registered with the Securities and Exchange Commission of Pakistan, after which they can now proceed with an approval-in-principle license to carry out their solution.

Pakistani’s central banks expect that the five digital banks will provide digital financial services as well as credit services and low-cost movement of money to all Pakistanis, which would promote financial inclusion and thereby banking the unbanked, which is one of the things Kuda Bank has thrived in doing in Nigeria.

Kuda, which is a digital banking solution founded in 2019, by Babs Ogundeyi and Musty Mustapha, in just three years has raised more than $90 million and even expanded its customer base to over five million users. The fintech solution prides itself on affordable and easy transactions, instant lending, debit card services, itself and many more including international remittance from the UK.

2021, saw Kuda bank close a $55 million series B round, in which the CEO, Babs Ougndeyi hinted that the recent funding will be used to strategize for continental expansion with its sole purpose of providing banking services for “every African on the planet”. While it is yet to fully establish its tentacles in other parts of the world, it has fulfilled some part of its promise by offering Africans in the UK its services, making Kuda the second largest remittance to Nigeria with the United States of America, leading in front. We do hope we don’t have to wait for long for Kuda to make good on this promise. However, for now, we watch as it establisestablishesh itself as a competitive force in the Pakistani market, competing with exisexistingitng companies like Easypaisa DB.