Koa helps African consumers make better money movements – TechCrunch
While Delila Kidanu grew up in Nairobi, Kenya, the M-Pesa mobile money platform was the go-to fintech platform for her and most Kenyans.
Safaricom-owned product provides basic access to financial services such as sending and receiving money and purchasing airtime. Yet some Kenyans still lack other digital financial services, from savings to investments.
Last year, residents of the country saved up to $ 13 billion, and more than 70% of them used informal savings groups and cooperatives to do so.
Based on his experience, Kidanu teamed up with Alexis Roman and Bubunyo Nyavor last year to start Koa to help Kenyans save and invest their money better. She is the COO of the company, while Roman and Nyavor act as CEO and CTO, respectively.
Koa is one of 20 companies competing for $ 100,000 and the Disrupt Cup in this week’s TechCrunch Disrupt Startup Battlefield competition.
In an interview with TechCrunch, Roman said that when the team began market research to understand how Kenyans saved, they were intrigued discover that many people were dissatisfied with current traditional savings options.
In addition to being offline models, saving with microfinance banks, cooperatives and informal savings groups has manual, expensive and opaque processes..
âIt was shocking that when we talked to people and they told us about their experiences in their co-ops and savings groups, we wondered why these aren’t better alternatives,â said Roman.. âPeople often use access as a keyword to describe the problem behind the way financial services are used. But for us, we think access is not the problem; that’s how easy or efficient it is to access the service. It is this obvious observation that prompted us to launch Koa.
Numerically, some banks offer savings products to Kenyans. But Koa still sees an opportunity as banks are generally a less popular savings destination for the average Kenyan, as the aforementioned statistics show..
The founders believe it will be different with Koa. Its first product is a savings app that allows consumers to deposit, save and earn interest on their money. When users log into the app, they can start creating savings goals in different pockets, a replica of what exists offline – where users would. normally save in different informal savings groups for various reasons.
But despite this huge opportunity, Koa had to grapple with two challenges.
First of all, the infrastructure, which is a necessity for the company so that it can receive deposits. In Kenya, a fintech start-up should generally in partnership with a financial institution. But the collaboration between banks and fintech in Kenya is quite infuriating and even lags behind compared to Nigeria, a country grappling with its own regulatory challenges.
The second issue Koa encountered was trust, an area in which informal savings groups and cooperatives have excelled by relying on word of mouth.
That said, Koa was able to overcome both challenges. After securing certain partnerships and hiring the necessary regulatory bodies to accept deposits, Koa makes it easy for Kenyans to make deposits without forcing them to go through the traditional long process of KYC..
Since launching the beta in April 2021, the company has onboarded around 5,000 customers who use its savings product. But WWith savings being the easiest fruit for fintech applications, Roman says the plan for Koa is to offer more products down the line.
On the one hand, Roman sees promise in offering integrated finance and banking tools as a service that would allow other startups to launch fintech products at a faster rate. And given Koa’s entry point with savings, Roman believes the company is in balance to build the rails of digital financial services in the country.
Ultimately, the plan is to become a digital banking platform offering other services such as loans and investments..
âWhile we offer direct savings apps to consumers, we can then look to other companies to help them offer savings or other financial products to their customers.. They wouldn’t have to go through all the struggles and all the burdens through regulatory hoops if we can help them get there, âhe said. âIn the long term, we want to become a digital financial institution. “
In addition to the savings, Koa also provides financial and educational content for users to help them get engaged. Platform users have now saved over $ 40,000 and Roman says business is heading for double-digit growth week after week at a time users and repositories. Koa also recently raised an undisclosed pre-seed investment from angel investors in Africa, Europe and the United States.
Before starting Koa, Roman previously directed strategy at Helium Health, one of the best funded African health technology startups. Kidanu worked with MEST Africa, a pan-African incubator and accelerator, as well as a business leader. Nyavor, on the other hand, is a serial founder and has led engineering teams at various African tech companies..
âI am optimistic in our team. I am really excited to work with these people who are all very customer focused and how we can give them the best experience. I think it’s a differentiator for us in the market, âsaid the CEO.