Kuda Bank’s mode of operation shows conventional banks do not need to spend so much money running network branches. This model also means free services for the bank’s customers.
The constant queue of unsatisfied customers found in banking halls is a testament to the necessity of a completely digital banking system.
The only institution closest to fulfilling the need for a digital bank remains Kuda bank. The bank’s customers are able to initiate and complete transactions without the need to visit a physical branch.
With this move, Kuda Bank has made a clear statement about their identity; they are not just another mobile wallet or savings app but a real bank. Every deposit made to Kuda Bank is insured by the NDIC (Nigerian Deposit Insurance Corporation).
Kuda Bank was established in 2016 by Mustapha Musty and Babs Ogundeyi. It began originally as Kudimoney or “the bank of the free”, an online-only savings and lending platform. It has undergone a few funding rounds to transform into what is now Nigeria’s first digital-only bank with no physical location.
In his comments after Kudimoney received a full banking license from the Nigerian Central bank and transformed into Kuda Bank, Babs Ogundeyi said: “We’re excited to usher in a new era in consumer banking and serve the many Africans, who we believe are frustrated with traditional banks Starting with Nigeria, we’ll launch a new kind of bank with a continued focus on improving our members’ financial lives rather than trying to burden them with hidden fees and excessive charges”
Kuda believes that anticipating customer needs and offering effective solutions should be the defining motto of the age of digital banking.
An Excellent Model for the Generation “Z”
Kuda Bank’s model is designed for the Gen “Z” and Millennials, who are known to be internet savvy. It offers them the usual banking services no matter their location. The great thing about this service is that the time and stress synonymous with conventional banking is cut down completely.
This entails a general improvement in banking services. For example, all an interested user needs to do is download the app and sign up, after which, they receive a free debit card delivered free of cost wherever they are in the country within a space of two weeks.
Users do not have to queue up at the bank anymore, and they can resolve complaints from their mobile devices without the need to visit a banking hall.
To ensure that customers can easily resolve transaction problems that may occur while using the app, Kuda Bank provides a 30-digit session ID for each transaction.
Normally, you have to call your bank to get the 30-digit session ID when things go awry but Kuda makes this readily available against industry standards.
There is an automatic saving option on Kuda which allows users to save automatically and earn as much as 15% interest annually.
With Kuda Bank, you will never hear about bank charges, or card and account maintenance fees which are dreaded by most customers of conventional banks.
As part of its launch promo, Kuda Bank offered 25 free interbank transfers per month to all customers who registered for a Kuda account before 1st January 2020. Each additional transfer to other banks after the first 25 transfers cost N10.
Kuda Bank is partnering with three of Nigeria’s biggest banks to create a wide branch network where customers can go to deposit money into their Kuda accounts for free.
Users can get debit cards issued by Access Bank, following a license from Verve and Visa International.
Babs Ogundeyi, CEO and founder of Kuda Bank, explained that the Kuda model saves the bank the heavy cost of operating network branches which translates into free banking for customers. He said this during the bank’s inaugural town hall meeting held at Radisson Blu Hotel, Ikeja.
There is a high level of security in place to ensure that customers’ personal information is kept safe from unauthorised access. This also allows users to freeze missing debit cards from the app.
Kuda Bank provides other security features, such as; validation mechanism for all users, a circuit-breaking tool that flags down transactions higher than the normal range. The circuit breaker system means that when a customer who usually transfers ₦50,000 suddenly attempts to transfer ₦500,000 it will be flagged to notify the user of a probable error or a fraudulent transaction.
Partners and Collaborations
Kuda Bank partners with Guaranty Trust Bank, Access Bank, and Zenith Bank. Besides the partnership with these premium banks, Kuda Bank made history recently as the first Nigerian bank to be included in the Binance P2P payment options. With this, users who trade in cryptocurrencies on Binance can make and receive payments through their Kuda accounts.
The ‘spend and save’ feature on Kuda is identical to what is obtainable on other Fintech apps. It automatically removes 2% of each expense made by a user from their balance as savings towards a rainy day fund.
Similar to other Fintechs, Kuda has to perform a KYC feature to verify user information using the customer’s Bank Verification Number (BVN).
In all of this, one thing that gives conventional banks the upper hand is the fact that a first-time account holder cannot enjoy the services from Kuda.
It is expected that Kuda Bank will handle the above issue with a BVN feature that allows it to be independent of other banks. However, there is some uncertainty about the technology through which this can be achieved. Kuda should also think about providing loans.
When more players enter the fray – which is projected to be soon – competition is expected to be based on customer-friendly rates and the ability to provide the best services.
