The neobank wave is starting to take form in Africa, notably in Nigeria, the place new fintechs try to tackle legacy banks by offering cheaper and extra customized banking companies.
Sparkle, based by an ex-CEO of a former Nigerian incumbent financial institution, is one such fintech, and it has closed a seed spherical of $3.1 million to scale operations.
Nigerians have a love-hate relationship with conventional banks. Although the variety of energetic financial institution accounts within the nation is above 100 million (from a inhabitants of about 200 million), issues round inefficient service supply, serial downtimes, and unhealthy loans and experiences have made many individuals mistrust banking companies.
Neobanks sensed a chance and are vying for the eye of those banked however unhappy clients. Sparkle, like several neobank out there, is relying on normal options such financial savings, invoice funds, top-ups, requesting or sending funds, in addition to much less frequent options — like invoice splitting and reviewing spending breakdowns — to draw clients in a crowded market.
“We’re fairly totally different in a method as a result of as a substitute of separating monetary companies from life-style, we’ve tried to deliver them collectively, particularly as we’ve seen that extra persons are starting to guide extra digitally-led lives,” CEO Uzoma Dozie stated to TechCrunch in an interview.
“It implies that we don’t see our clients from accounts, funds, deposits or credit score views, however from how can we assist them do what they need to do at any explicit time.” In order that’s Sparkle’s pitch — to supply monetary, life-style and enterprise help companies to Nigerians.
In April, the corporate launched Sparkle Enterprise to amass a special set of underserved customers: small and medium companies. Sparkle claims the brand new enterprise arm has caught on nicely with this class, which now has entry to stock and bill administration, tax recommendation, and payroll and worker administration companies.
These companies can entry these options with a tax identification quantity (TIN) and an e mail handle — the bottom type of documentation out there for companies.
Sparkle’s mixture of offering banking companies to people and companies on a single platform is exclusive. Different neobanks within the nation — similar to Kuda, VBank, FairMoney and Carbon — are identified to supply tailor-made companies to people. On the identical time, platforms together with Brass and Prospa cater to various sizes of companies.
“As a small enterprise, I’m not carrying my checking account on my cellular. I’m carrying my enterprise. So we’re bringing the whole lot about your online business into one place as a way to do enterprise wherever you’re,” Dozie stated. “For people, we’re bringing the whole lot into one place as a way to do what you need to do fairly simply wherever you’re. However the backside line is that we’re offering you with the data that it’s worthwhile to take spontaneous choices.”
Dozie highlights some options of Sparkle that clients may hardly get with different platforms. As an example, clients can test the transaction historical past with a specific beneficiary with out looking via a monetary assertion, verify the placement the place they made every transaction, and schedule funds.
Sparkle’s design can also be tailor-made to how most Nigerians function their lives offline. Prospects can have a number of accounts (private and enterprise) and swap at any time when they need to on Sparkle. They’ll use the platform on varied telephones with the identical enhanced safety as different platforms that permit login on a single telephone, Dozie stated.
Since launching final 12 months, the neobank has acquired over 40,000 clients on the person banking facet and a pair of,000 companies. The corporate started charging particular person clients small charges to maintain their accounts working and plans to cost companies for many options besides taxation companies, stated Dozie.
Just like most digital banks within the nation, Sparkle has a microfinance financial institution license. It has additionally secured a partnership with Visa to permit customers to make in-person or digital funds with a Visa card. Different partnerships are with corporations like Community Worldwide and PwC Nigeria.
Anybody educated on how the Nigerian fintech area works is aware of it may possibly take a while to safe licenses and partnerships. Sparkle has been in a position to take action in below a 12 months as a result of its CEO’s huge expertise and connections.
Earlier than Sparkle, Dozie was the CEO and final group managing director of Diamond Financial institution. He oversaw the financial institution’s company, business and retail arms earlier than its merger with Entry Financial institution; the enterprise is now 29 million clients sturdy.
With Sparkle, Dozie is eager on increasing the capabilities of Nigeria’s banking and retail sectors, persevering with from the place he left off at Diamond Financial institution. As an investor himself, he enlisted an all-Nigerian solid for his seed spherical — lead investor Leadway Assurance, participant Trium Community and some unnamed high-net-worth people. The funding comes after Sparkle closed a family and friends pre-seed spherical of $2 million throughout the previous 12 months.
He opined that whereas he might have raised cash from international buyers, he selected to go together with this group of buyers as a result of they supply the expertise and market that Sparkle must scale in Nigeria. He was additionally eager on getting high-net-worth people to put money into a tech firm.
“Collectively, as a gaggle of buyers and enterprise builders, we’re Nigerians who’re bullish about Nigeria and the chance the nation presents by way of constructing world networks and communities, all through one app,” the CEO stated in an announcement.
The CEO advised TechCrunch that Sparkle will use the funding for 2 functions: constructing robotic course of automation to assist with mundane and repetitive processes, then hiring expertise throughout engineering, finance threat and advertising.