MEA Fintech Weekly News: Are Neobanks the Next Big Thing for Nigeria?

MEA Fintech Weekly News: Are Neobanks the Next Big Thing for Nigeria?

This week marked a new win for digital banks in Nigeria. Neobank Sparkle raised US$3.1 million in a seed round for expansion efforts (TechCrunch).

Founded by former CEO of Diamond Bank Uzoma Dozie, Sparkle provides both individual and business banking services. It is licensed in Nigeria as a micro financing bank.

The seed round was led by Leadway Assurance, along with participation from Trium Network and undisclosed high-net-worth individuals. The investment comes after Sparkle closed a friends and family pre-seed round of US$2 million within the past year.

Funding will be used towards building a robotic automation system for repetitive processes, and hiring across the neobank’s engineering, finance risk and marketing teams, the report said.

It added that despite over 50% of the population being banked, inefficient services, downtimes and bad loans have led to a “love-hate relationship” between customers and traditional banks.

In contrast, digital banks in Nigeria have been attracting some of the biggest funding rounds this year (data according to Crunchbase), indicating growing investor interest in this space. Kuda, one of the top digital banks in Nigeria, raised two funding rounds this year, a Series A for US$25 million followed by a US$55 million Series B. Another Nigerian digital bank FairMoney raised