NAIROBI, Kenya–A Kenyan fintech startup is working with this country’s credit unions, known as SACCOs, to turn them modern digital banks, according to a new report.
Founded in 2018 by Cynthia Wandia and David Hwan, the fintech, called Kwara, has built a digital banking platform designed to help unbanked and underbanked individuals to build wealth together in a frictionless way, DisruptAfrica.com reported.
“It offers a management platform to drive efficiency and automation at the cooperative staff level, and also has a neobank-style mobile banking app for end-clients, alongside alternative channels,” the report states. “Meanwhile, Kwara connects the savings cooperatives with banks, payment gateways and other third parties through an open API.”
This all comes in one software-as-a-service package, meaning cooperative clients pay for their usage and get a single end-to-end solution, DisruptAfrica.com added.
‘Not Fit’ for Use
“Savings and credit cooperatives – in Kenya called SACCOs, in other countries sometimes referred to as credit unions – are strong, historical financial institutions with a unique feature: the depositors are also shareholders, meaning the interests are fundamentally aligned,” Wandia told Disrupt Africa. “These institutions allow people at the last mile to save and earn high interest, as well as borrow at fair rates. The current digital solutions for savings and credit cooperatives are however not fit for purpose. That means the pricing does not fit their budgets, security is frail, or the system is unfriendly to users.”
Kwara has built a platform from the ground up, which aims to address the unique pain points cooperatives go through, according to the report.
Kwara reported it has seen rapid growth this year and has acquired 30 cooperative clients across Kenya, South Africa and the Philippines, serving more than 50,000 members.
Strong Onboarding
“We currently consistently close and onboard smaller cooperatives and have been able to show the global product-market fit by signing and onboarding clients across South Africa and the Philippines. In addition, during the peak of the COVID-19 restrictions last year, we launched a trial version called Kwara Pronto,” Wandia told DisruptAfrica.com. “We have shown that those trials lead to an 85% conversion rate, with all who had the funds to continue becoming paying clients. Another important sign of strong uptake is that we closed one of the largest savings and credit cooperatives in Kenya, who have over 25,000 members.”
The startup charges a monthly subscription fee, ranging from US$300 per month to US$10,000 per month, depending on the cooperative’s needs.