Branch International, an Andreessen-backed startup, is vying to become a pan-African digital bank, Bloomberg reported Tuesday (March 1).
The microfinance company now sees a growth opportunity in online financial services in Africa.
The company has operations in India, Nigeria, Kenya and Ghana, and it plans to build its business through buying microfinance lenders, according to Matt Flannery, founder and CEO.
He said the new deals, including some in Tanzania, will help Branch’s position as the first FinTech to buy banks in sub-Saharan Africa.
“The establishment of a true pan-African digital bank is long overdue,” Flannery said, speaking from the Kenyan capital, Nairobi, adding that there’s a “real need” for a “sort of borderless bank” that can take deposits and offer small loans.
Branch has already dispersed over $600 million in loans since 2015. The FinTech’s model uses machine learning to determine a borrower’s credit-worthiness.
The company is backed by venture capitalist Andreessen Horowitz, along with CreditEase Fintech Investment Fund and the International Finance Corp.
Flannery said the idea was to offer several financial products under different licenses through sub-Saharan Africa.
He said the company’s plan was to expand in Tanzania, Uganda, Nigeria or Ghana.
Bloomberg wrote that because many people in Africa make use of mobile-phone digital wallets makes the country a fertile ground for the new finance model.
Read more: Mobile FinTech Products Offer Path to Financial Inclusion in Nigeria
PYMNTS wrote recently that Nigerian businesses are challenged to find financial solutions, due to the underdeveloped financial and physical infrastructure.
Annual interests rates there are 24% to 30%, and these factors have served to keep many people excluded from the banking system as they can’t find financing.
However, Nigeria and sub-Saharan Africa have the advantage of high rates of mobile penetration, using those as payment platforms that predate Venmo. That means there’s potential for companies that can reach a mobile-savvy base.
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NEW PYMNTS DATA: ACCOUNT OPENING AND LOAN SERVICING IN THE DIGITAL ENVIRONMENT
About: Forty-two percent of U.S. consumers are more likely to open accounts with FIs that make it easy to auto-share their banking details during sign-up. The PYMNTS study Account Opening And Loan Servicing In The Digital Environment, surveyed 2,300 consumers to examine how FIs can leverage open banking to engage customers and create a better account opening experience.
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