Fintech Farm nabs $7.4M to launch neobanks in Nigeria and other emerging markets

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fintech farm, a Newly The UK-launched fintech startup that builds digital banks in emerging markets confirmed to Nerdshala today that it has raised $7.4 million in seed funding.

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seed round was led by Flyer One Ventures and Solid. TA Ventures, GG, U.Ventures and Ventures Capital also participated. The company said it plans to use the investment to launch Neobank in eight countries over the next 24 months.,

Digital banks, Neobanks, Challenger banks or whatever you may call them are one of the biggest recipients of VC investments in FinTech., Globally, hundreds of people have been trying to challenge existing ones in their respective markets over the years.

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For example in Eastern Europe, Ukrainian Neobank Monobank, in just years of operation, has generated over 4.5 million customers and over $100 in revenue, as claimed by the company last year. After helping Monobank scale in Europe, its co-founder and chief technology officer, Dimitro Dubillet, aims to do the same in emerging markets through his new company.

He started the fintech farm with Nick Bezcrowny, former director of KPMG UK, where he led M&A in global fintech, and Alexander Vityaz, founder of Middleware.,

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In November 2021, the fintech farm captured its first market, Azerbaijan, taking a credit-based Neobank approach and providing loans to customers with thin credit histories via cards and a mobile app.

On a call with Nerdshala, Dubilet said that the operational model of the fintech farm is to launch its app in Azerbaijan and future markets, through partnerships with local banks.

“Typically, it’s a 50-50 partnership with a local bank,” he commented on how this partnership works., According to him, fintech farms is responsible for The Business Side of Things – App and Credit Decision Making Process, The partner bank, along with its local knowledge, holds the license and capital as the two parties co-invest in the business uniformly,

As a UK-based fintech, Fintech Farm is using a somewhat different approach from the traditional model in the country and in Europe, where Neobanks (Monzo, Starling Bank, Revolt) prefer to have their own banking license and provide their own financial services. offer. ,

But given its operational approach, that is, providing financial services to emerging markets, it makes sense to have a different business model. The fintech farm uses a different name in each country in which it launches, but the same design and mascot – a strange lion with a lilac mane.,

Two months after launching as Leobank in Azerbaijan, the fintech farm has issued over 100,000 cards; By the end of the year, that number is expected to reach one million.,

And over the next two years, the fintech farm plans to enter eight emerging markets spread across Africa and Asia, the first of which is Nigeria.,

“We plan to launch similar businesses in about eight other markets which are Some Certainly bigger than Azerbaijan,” said Dublet. “Actually, our next market is going to be Nigeria, we have visited Nigeria twice before and it is one of our favorite countries,” Dubilet said, adding that the launch will take place in the first quarter of 2022. is likely to.

Meanwhile, the fintech farm has so far done the opposite in Nigeria, despite the company’s original plan to partner with one bank in each country. Right now, the company has acquired its own microfinance banking license – most of the fintech licenses in the country. need to keep, The founders said that once the fintech farm has 200,000 customers, it will partner with a bank to grow. According to bezkrovnyA determining factor in choosing a partner bank, apart from licensing and infrastructural support, is how fast they can move to capture millions of customers and issue hundreds of millions (dollars) in loans.

The flagship product of Fintech Farms is a card which acts as a debit card where users can withdraw funds from deposits and a credit card where the credit facility is attached in the name of the customer. A savings account, deposits and transfers are some of the features of the app.

Nigeria’s population is hungry for credit and the fintech farm’s credit-led Neobank will work to meet demand (most of its revenue comes from these loans) companies like Fairmoney and Carbon have done for years. howeverUnlike these indigenous neobanks, the fintech farm seeks to use credit cards to provide cheaper and more accessible credit.

,According to Credit products, we see an opportunity for “Mass Credit Cards” in Nigeria. Currently, credit cards issued by traditional banks are limited for the upper-middle class,” Bezkrovny said in a statement. “At the same time, APRs for credit offerings from Neobank and alternative lenders can exceed 100%. We are going to fill this gap and accept those customers neglected by traditional banks and offer them reasonable interest rates,

The West African nation, unlike most developed countries, lacks an advanced credit bureau system for detailing people’s credit histories, so there is some doubt as to how fintech farms will operate credit card use. But Doubilet is very confident, citing the company’s data science teams, which he describes as “one of the best in the world” to do some magic.,

As part of this funding round, Genesis co-founder Vladimir Mengoletny will join the board of Fintech Farm, the parent company of African online classifieds platform Jiji. He is also a partner in Flyer One, a co-principal investor.

The founders of Fintech Farms believe that the expertise and understanding of Mnogoletniy and his team will be crucial in the growth of their company.

In a statement, Mnogoletniy said that GG, building one of the largest e-commerce platforms based on GMV, was looking for the right partner to enter neobanking and invest in fintech farms to that end. was a strategic investment.

As the fintech farm uses the investment to fund its expansion plans, it also intends to spend heavily on marketing and hiring talent, especially engineers and data scientists.

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