Kuda Bank’s model saves conventional banks the heavy cost of running network branches, further translating into free banking services for customers.
The now-frequent presence of agitated customers in long queues in the banking hall emphasizes the need for a wholly digital bank.
Kuda Bank is the first institution that comes close to meeting this need, where customers can carry out all their banking transactions without having to visit a physical branch.
Kuda Bank, founded by Babs Ogundeyi and Mustapha Musty, started out in 2016 as Kudimoney (“the bank of the free”), online-only savings, and lending platform, and had gone through a couple of funding rounds before transitioning into Nigeria’s first actual digital-only bank without a physical location.
Speaking after Kudimoney got its full banking license from the Central Bank of Nigeria and transitioned into Kuda Bank, Babs Ogundeyi said: “We’re excited to usher in a new era in consumer banking and serve the many Africans, who we believe are frustrated with traditional banks Starting with Nigeria, we’ll launch a new kind of bank with a continued focus on improving our members’ financial lives rather than trying to burden them with hidden fees and excessive charges”
This move made it clear that Kuda bank is not just another savings app or mobile wallet but an actual bank. The bank’s deposits are insured by the Nigerian deposit insurance corporation (NDIC).
A model for the Gen Z
Kuda bank is modeled for the Millennial and the Gen ‘z’ internet-savvy population, providing them the same banking services irrespective of location, but without the time and stress that comes with conventional banking.
It is an all-round improvement of the banking services. For instance, users can open a Kuda account by simply downloading the app and signing up, after which they get a free debit card delivered at no cost nationwide within two weeks.
With these, one can easily save the time of queuing in the bank and resolve complaints from a mobile device without having to visit any bank.
To make it easy for users to resolve transaction issues that may occur while using the app, Kuda provides the 30-digit session ID for every transaction.
This isn’t an industry standard and normally, you have to call your bank to request this reference number when things go wrong.
Anticipating user needs and providing convenient solutions, in Kuda’s thinking, should define the age of digital banking.
Kuda Bank also has an automatic savings option where users can save automatically and earn up t0 15% annual interest.
The bank charges, card, and account maintenance fees which have become a nightmare to Account holders, do not apply to the Bank.
As part of the launch promotion, the bank offered 25 free interbank transfers monthly for all customers who opened a Kuda account before January 1, 2020 while extra transfers to other banks cost N10 each.
Kuda has a wide branch network where customers can make deposits for free, thanks to its partnership with three of Nigeria’s biggest banks.
Debit cards are also issued by access bank, pursuant to a license from Visa International & Verve.
Speaking at the bank’s first town hall meeting at Radisson Blu Hotel, Ikeja, CEO, and founder Babs Ogundeyi explained that the model saves the bank heavy cost of running network branches, and this further translates into free banking services for customers.
(READ MORE: Protecting your money from fraudsters)
The bank also offers a high level of security to protect customers’ personal information from unauthorized use, and allows them to freeze debit cards from the app when it goes missing.
Other security features include; a validation mechanism for every user, a circuit-breaking mechanism that flags down transactions higher than the usual range. This way, if a customer that usually does ₦50, 000 transfers, suddenly attempt an N500, 000 transfer, it will be flagged to alert the customer of a potential mistake, or of a fraudulent transaction.
Partnerships and collaborations
Besides its partnerships with Access Bank, Guaranty Trust Bank, and Zenith Bank, Kuda Bank recently became the first Nigerian bank to be added as part of the Binance P2P payment options, making it possible for people carrying out Peer trading of cryptocurrency on Binance to make and receive payments with their Kuda Account.
Its ‘Spend and Save’ feature is similar to what is found on other Fintech apps, and it automates the removal of 2% of every expense made from the user’s balance as savings for a rainy-day fund.
Like other competing Fintech, Kuda Bank also has to do a KYC feature that verifies user information using the Bank Verification Number (BVN).
But the absence of a physical branch means that Kuda bank services cannot be used by a first-time account holder.
There is the hope that the bank would address this issue with a BVN feature that gives it independence from other banks, but the technology with which this is to be achieved is not yet certain. It may also consider providing loans.
More players in the space means that in no time, the competition will be based on customer-friendly rates and excellent services.
Ruth Okwumbu has a MSc. and BSc. in Mass Communication from the University of Nigeria, Nsukka, and Delta state university respectively. Prior to her role as analyst at Nairametrics, she had a progressive six year writing career. As a Business Analyst with Narametrics, she focuses on profiles of top business executives, founders, startups and the drama surrounding their successes and challenges. You may contact her via ruth.okwumbu@nairametrics.ng
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