Nigeria remains a largely cash-dominated country. with over 100 million unbanked Nigerian population excluded or have no access to financial services due to limited financial literacy.
Bankly, a Nigerian fintech startup digitizing cash for the unbanked via its traditional savings scheme that enables groups of individuals to contribute to informal savings goals announced that it has closed a $2 million seed round. Founded by Tomilola Adejana and Fredrick Adams in 2018, Bankly is digitizing the informal thrift collections system known with different names such as esusu or ajo 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.
However, there are issues around this system. First is the security issues that arise when the thrift collector goes missing with the money or is feared dead, leaving no clue where the savings are kept. There’s also limited access where members cannot consistently save if absent from a particular location. The third is the lack of customer data since most don’t have an online banking presence.
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.
According to the report from Techcrunch, Adejana the CEO of Bankly says part of the funds will be channelled towards building the agent networks and increasing its customer base to 35,000 in cash-dependent communities and also providing direct-to-consumer products in the coming months.
“Just in the same way mobile inclusion happened, you need to then focus on acquiring customers who, after transferring cash to their mobile accounts, use it to buy airtime or make payments. We call that the three-phase process. The distribution first, then focusing on the consumer, after that full digitization. This is how we reach financial inclusion.” says Adejana.
