GLASGOW, Scotland–A fintech that launched in Kenya to provide neo-bank and cloud-based core services to credit unions and which has seen phenomenal growth shared some of the secrets to its success with credit unions leaders gathered here.
Called Kwara, the company launched in 2019 and now has a relationship with 90 credit unions (known as SACCOs in Kenya), according to Cynthia Wandia, its co-founder and CEO.
Why has it grown so quickly? According to Wandia:
- It works directly with CUs it serves. It co-developed its offerings with one of the largest SACCOs in Kenya to “refine” its offerings.
- It worked with regulators, “listening to some of the challenges and pain points they were facing.”
- It believes in “banking grade” security. “We don’t compromise when it comes to security, reliability, and more. And even though fintechs can get a reputation for moving fast and not securing things, we knew the second we got into financial services that banking grade was not negotiable.”
Wandia defined a neo-bank as a financial institution that gives consumers a cheaper, digital-only alternative to traditional banks. She cited Chime as an example.
The Features
She said features of a neobank include using technology to personalize services and reduce operational costs; the ability to launch new features quickly; the ability to develop unique partnerships and to cross sell, and the ability to offer services for free to win market share.
The challenges she said SACCOS face will sound familiar to credit unions in other parts of the world and include:
- Digitizing is expensive
- Fraud undermines trust and erodes margins
- Support infrastructure is inaccessible and costly
- Consumers are increasingly digital natives
“We thought some of the advantages of neo-banking could be used to address some of these challenges,” she said.
How Does it Help?
So how does neobanking help?
According to Wandia, neobanking provides low operational costs with the savings passed on to members. She said the Kwara solution represents a 10x efficiency over legacy systems.
In addition, she said, it supercharges speed and ease of work, allows rapid product innovation to generate a new customer base, and is compliant with granular reporting and analytics to help decision-making.
Additional benefits include personalization and ease of access, member activity and trust, products that meet individual needs, the enablement of independent transactions, the automation of savings and repayment functions, and an increase in trust and loyalty.
“This also builds on the social of Millennials and Gen Z, such as friends coming together to save for something,” Wandia said. “As it gets more and more personalized you begin to trust the financial institution more and more.”
The Third Piece
According to Wandia, the third piece of neobanking is it is API-first, meaning the platform is set up to communicate with other institutions and companies that are third parties that offer services that members want to do business with.
“It drives cross-selling, manages credit risk, offers third-party payment channels, including cards, and monetizes insurance, bill payment and more,” Wandia said.
She credited some of the success to the fact it was built by people who “love SACCOs and know how to grow them.”
For that reason, she said the Kwara Core, Kwara App and Kwara Open product allow credit unions to plug into third parties.
Success Seen
Has it worked?
According to Wandia, “Kwara increases staff productivity by over 50%. Loan applications increased by 300%. It has doubled the members, as its 224 times faster to join. It’s more cost effective as it’s through a subscription price.”
Wandia stressed the move to a digital environment does not mean abandoning traditional credit union strengths.
“It doesn’t mean letting go some of the high-touch services,” said Wandia. “ There is live chat, a comprehensive knowledge base, a single point of contact, world-class success managers and full training is included.”
And she added, the neobank solution is especially fitting in Kenya, where the median age is 20 and half the population is under 24.