Ghanaian fintech Affinity bags $8M to scale digital banking in a mobile money-driven market

The top digital banking platforms in Africa usually come from populous markets like high-rise, Nigeria, South Africa and Egypt. But Affinity AfricaAn upstart of Ghana wants to join the conversation. Startup has collected millions of dollars for seed funds to further enhance its financial products across the country, where mobile money is the dominant financial equipment.

Although mobile money is about to go for financial transactions, the traditional banking sector of Ghana and Africa as a whole remains very profitable. From the epidemic, there are banks in Ghana Record With a Return (More) which is higher than the global average.

However, these gains depend a lot on fees, while millions of people have been undergoing high operational expenditures, personal papers and prolonged on -boarding.

Today, less than 10% of Africa’s business has credit access and lacks formal financial services for more than 60% of adults World BankThe This growing gap has increased the demand for digital banking options like Affinity, which provides a cheap, more inclusive model.

Affinity has driven more than 50,000 customers since its inception of its founder and CEO last October Mogana Say Significantly, 65% of its users have never been able to access formal banking products before and more than 60% of women are working in the informal sector.

So why did Digital Banking Upstart take this long time to achieve this national traction in Ghana? The country’s strict banking rules play a major role. Not like neighboring Nigeria, Where digital banks can easily operate with small of licensesThese national licenses are rare, expensive and take time to go to Ghana, making it difficult for Fintecs to enter the place.

“Ghana’s regulator is focusing on protection at the customers, especially deposit companies,” Mogani told TechCrunch. “We had to prove strong risk management, even to break as a small of -agency, and our mission had to be aligned for the banned banking government. The thing they finally confirmed to how our digital platform reduces friction and reduces banking costs for individuals and micro, small and medium enterprises (MSME) ”

From investment banking to fintech disruption

Mougani, a fourth -generation Ghanian family of Lebanon, studied in the UK, graduated and doctorate before starting his career in academia and finance. He later worked as a director in the Man Group, a $ 160 billion Global Investment Fund. He is the largest of Latin America’s largest small of Latin America’s largest of Latin America

After returning to Ghana ten years ago, Mougani wanted to solve Africa’s financial inclusion problem, the global consultation report often highlighted a challenge.

“Africa’s $ 331 billion dollars are quoted today as credit is quoted today,” he said. “Nothing really changed. This has made me a full retail bank for MSMEs, which is suitable for the majority of Africa as Santanda, Lloyds or Chase Bank in Europe and the United States. “

He and a group of friends and a family team collected $ 2 million to earn a small off -bank bank in 2021. They have included funds by selling his London home, claiming. The entity, which received a savings and loans license, was granted for more than 10 years, served as an examination field to solve its current banking.

By 2022, Affinity has raised an additional $ 3 million in the pre-bees round to upgrade this license. After a few months’ stealth exams, Fintech officially launched its app after the approval of the country’s Apex Bank of Ghana last October.

The Ghanian fintech serves both the person and the micro-entrepreneur, which is often different in Africa. Customers get free savings and current accounts without a transaction limit and the platform immediately starts credit-scoring users on the basis of their transaction history.

After a few months of use, the Affinity extends the credit lines with the monthly interest rate of 3-7%. Acra-based fintech distributed more than $ 15 million to Loans across various products, the instant loans are 30% month-over-month and a non-performing loan (NPL) rate has increased by 3%.

A hybrid approach: Digital banking with physical touch

Customers can also access other banking services, including saving, paying, investing and transferring in bank and mobile money wallets. Last month, 89% of the deposit flow, which has increased more than 54% month since the introduction, came from mobile money top-ups, the rest from the bank transfer.

The USSD and mobile apps are coming up 10% of fees and commissions such as utility bills and Internet payment, more than 90% of Affinity income. According to Mougani, its revenue has increased by 37% of the month-over month compared to the last six months.

Like many digital banks in Africa, affection Mix online banking with offline touchpoints Through its agent network. These agents, about 30 of them, are personally met with small businesses, ships them on the application and help the Trust interval for the first time digital banking users.

Its 50,000 customers joined the 26,000 agency network and signed up using the 24,000 mobile app. Significantly, 55% of agents-acquired customers have transferred the app, it shows strong digital intake after boarding.

“This shift has managed to rewrite our agency technique – focuses on onboarding, primary education, and using agents to run digital literacy to encourage application adoption. We are interested in refining the approach to this hybrid growth as soon as we scale, “said Maugani.

Affinity’s $ 8 million seed round was led by European VC companies Grazia Equity (Germany) and supported VC (London) by identifying their first African investment. Other investors include Angza Capital, Launch Africa, Renewal Capital, Finka International, Attiswafa Ventures, Impact Resources, Eldon Capital Backers.

“Backded, we are the founder-first, and we cannot think of better person for making a local bank in Africa than Tareq,” said Andre de Hess, the founder and managing partner of the back. “He began investing career in banks through the financial crisis of 20, experts in control and strategy and created a world -class banking software stack for Affinity from ground -up. Her skill of connecting and understanding with customers has driven the numbers of the impressive primary user. “