Babs Ogundeyi, Founder & CEO @ Kuda

Yes, thanks guys for having me on. So Kuda, we're a full service digital only bank. We are Africa focused and we provide banking services to Africans in Africa, and we have a vision to provide banking services to Africans outside of Africa as well. Some of the things that we do are P2P transfers, we issue debit cards, we have access to fractional shares. So basically everything that people are typically used to with a new bank in Europe or in America, that's what we are, but our audience is skewed towards the African audience.

I think I started my career within financial services. I actually wanted to be an investment banker when I was younger. I thought they were really cool because I watched movies where they wore pinstriped suits and drove red Ferraris. I interned at one and quickly realized I didn't want to be an investment banker, but somehow ended up working still within finance. So I worked at PricewaterhouseCoopers in England, and then I moved to Nigeria where I still worked with PricewaterhouseCoopers, and then worked in the government. I was headhunted to work in the Nigerian government as a special advisor on finance, and one of the things I had to do was to manage the state microfinance bank, which again was very insightful for me. In between that, I had set up a company that was a classified car magazine, which eventually I sold to a major newspaper in Nigeria. So kind of all those experiences is what led to Kuda. It really felt like I'd been preparing my entire career to start Kuda. Working in Nigeria, working at PricewaterhouseCoopers where all my clients were banks, I just had a lightbulb moment when I was working with the government about setting up a new type of bank, a more affordable bank and just more accessible. It became very apparent that banking and financial services in general was kind of like a preserve of a niche audience, the privileged, big corporate, government, HNI, whereas the majority of the customers and potential customers are those that don't have the same level of affluence, but collectively they could make for a very lucrative financial institution. So I had to think of a way to bring them in and be able to offer affordable financial services, and that's kind of how Kuda started. Of course, around the same time, other neobanks in Europe were springing up, so for me it just buttressed the need for a new way to provide financial services. The digital only model felt very apt for what I had in mind in terms of accessibility and affordability, and that's kind of how it started. This was way back in 2019, and I just kind of rode with that up until now.

Initially it wasn't really a business. Right at the beginning, the first thing that I did was just create a website. I used another name, and it was a website to basically see if people would interact with a faceless instrument. The first was trying to provide loans. We did that and it worked because within 3 months we had 60,000 unique people that tried to take a loan. Unfortunately there was no money to give to them, but it proved that there is interest. So we flipped it the other way and started a savings product. Same website, just tweaked a few things, and said you can save money bit by bit. Remember this was at a time when, especially in Nigeria, digital only financial offering was pretty alien, which is actually a bit unusual now because now it's mainstream. Again that worked. We didn't even have a license, we didn't have anything. We very quickly realized we had to be regulated, so at the time we partnered with a bank. We were kind of the marketing arm, so we offered high interest. Again it worked, but we didn't make any money because all the money that we made from the bank we gave to the customers in interest. But those two experiments were very good because it gave assurance that there was a need and this kind of faceless financial institution can work.

Not really. There wasn't any digital marketing. It was literally a website, not just a landing page. I told you I sold a company to a major newspaper, and the way that the newspaper found out was I used to wake up every morning and put the magazine inside the newspapers before they got distributed because there was no money for ads. So basically it was the same thing. I just printed a whole bunch of flyers. You paid for printing flyers, but I would wake up at 4:00 AM in the morning and literally receive the national newspapers and would be there inserting flyers into these newspapers, and it would get distributed nationwide. That was the hack, and that brought in a lot of customers and at least a lot of awareness. People tried it and we took it from there.

You could definitely get insight. That was the only marketing that was done at that time, and we just noticed a lot of inbounds on the website. You would also see the location as well. Depending on the newspaper, some of these newspapers were very popular in certain states, so you would know it was working because you could see the map and where the traffic was coming from, since you knew which newspaper you had inserted flyers into on a particular day. It was a good hack at the time, and what it revealed was there was something in this. Then I reached out to my now co-founder, who's also the CTO, and said we should actually just build the bank. He said I was crazy but he would help me. Later on he saw the light and quit his very cushy bank job to come and build out the digital only proposition. That took about 9 to 12 months to get everything going in terms of the technology. In between that, I sold my house. Well, not a house, I had a piece of land in Nigeria which I sold and bought a microfinance bank with it. Then we used the license from that, changed the name of that bank to Kuda, and that's how we were able to start trading. We did various integrations with the switch because we needed to be a financial institution, and that was just the fastest way. We needed to have very strong conviction. It was a big risk, but I was sure it was going to work, and luckily it did. I would have been in big trouble if it didn't. That's how we got started. We just started hiring engineers here and there. We hadn't raised any capital at this point, but we had the waiting list from the previous experiment. Then we went out and raised an angel round just before we launched, and we launched on August 7th, 2019. We've been growing exponentially ever since.

We had exhausted our private capital on acquiring the bank. It was a microfinance bank, so it wasn't a big bank, but it allowed us to do all the things we wanted to do. Think of a really advanced EMI that allows you to take deposits and also issue credit. We got an office and bought a few laptops for the engineers. But we wanted to create an illusion of scale from day one. In terms of the brand and tone, we did a lot of work with an external agency. But one thing was sure: we had to put some marketing resource behind it, and we wanted to issue physical debit cards, which required a lot of upfront payments for the plastic and packaging. We just had to raise capital. We knew it wasn't going to be revenue generating from day one. Also, we had to meet minimum capital requirement as a regulated entity. The money used to acquire the bank went to the previous owners, not into the new entity, so we needed capital to meet that minimum capital requirement. The first check came from my dorm mate at school. We shared a dorm together many years ago in boarding school. He was excited and put the first check in. Then we did a roadshow with him and his friends. He was an investment banker, and that's how we got the first close to a million dollars. Then we had an angel that put in a bigger single ticket. We raised a total of 1.6 million just before launch. We ran that for a year, got to 50,000 customers, and then went out to raise institutional money.

I think it was a bit of both. There was definitely a clear master plan. They needed to be a license, they needed to be a cool brand, and the technology needed to be pretty epic because it just didn't exist. I didn't know exactly how everything would pan out, but I had those big things that needed to be done. You just go through the process, iterate, try different things. An application process would take two or three years. My experience in government also helped. I had some contacts and was able to get early insight into potential acquisition targets, especially an institution that was pretty clean because you don't want to acquire something with a lot of skeletons. It was just a lot of different factors. You have to be ready to take advantage. Once that decision was made, it turned out that the only option to do this quickly was to acquire and do a name change. That was the quickest way, and that's what happened.

I think there are doubts all the time, even today. But the goal just gets bigger and bigger. Now you want to be the biggest company or the biggest bank in Africa and IPO. I know it's possible, but of course there are doubts that it may not happen. I think you've just got to have the courage and belief, and also the preparation for it. You have to believe in your own abilities and believe that if you do your best, you'll come out good at the end of the day. I couldn't see what was at the other side, but I believed that I would land relatively safely. That conviction is really important because there are lots of barriers, challenges, and obstacles at every single step. But if you have that strong conviction and courage, you need to be relatively fearless, or in my case a little bit naive, which kind of helps.

I think I'm pretty fortunate in terms of my history. I had a good education, good work experience, good domain knowledge. I understood the geography. If not me, then who? I could do it. It's not arrogance, it's just having that confidence that someone's got to do it. That's what I mean about being prepared. When I look at all the things I had done previously, I felt I had a good chance and the right skill set to pull this off.

I'll start on the courage angle. It's having the courage and passion to continue to build what you think is necessary to build, and it has to be relentless because there are going to be so many challenges. The easiest thing to do is just to not do it.

I think it can be developed, but it's really down to being prepared. Everybody has ideas, but how much research have you done into that idea? How much research have you done into the market? Who else is doing it? Has it been successful anywhere else? All of those things contribute to that belief and courage. The work needs to be done to get to that level of naive courage. It just needs to be there, otherwise you won't carry on. So it's important to be prepared for what's to come. Second, I would say it's better to go the road with others. Going alone is very lonely and very tricky. No one is good at everything, and building a business requires the people in it to be good at everything. You're going from zero to scale, you need to be good at finance, marketing, technology, regulatory compliance, so many things. I don't think one person possesses all of those skills. So it's important as early as possible to have other people joining you on the journey. Some people call them co-founders, but you can't have five or ten co-founders. You need to have believers with you. That really helped me. I have a technical co-founder and other people that I consider to be co-founders, but they're more like a founding team. They're still in the business today. They really get it because they were there from the beginning when we were in my little study. We egged each other on and helped each other keep going. They add more than just technical knowledge, but also emotional inspiration. At the end of the day, we're founders but we're also human. We need that pick-me-up now and again.

I think you can. It's about sacrifices. My co-founder had a very good job at probably the best bank in Nigeria at the time. Sacrificing that, I don't think there's any greater way to demonstrate confidence in the project. He took a pay cut, took equity, which was very uncertain. Leaving certainty for uncertainty is a testament of the faith somebody has. You can see it in the dedication of the early group of people, the time spent, people willing to work silly hours in not very comfortable environments. Every situation is different, but there are signs that you can definitely pick up to ensure you're with the right team. Finally, this works for me: just having clear writing things down and planning. As basic as it sounds, put everything in a calendar, not just work stuff, even personal stuff. You're going to bruise a lot of relationships along the way because you need to be focused on this, and you can easily get into a bubble of 'my company.' But it's also very helpful to still have a life outside your company. Some of the things I do is I have a calendar point to call my parents because I could literally just keep going without remembering that I haven't spoken to them. Those things are important. They help keep you sane. At times it's very crazy, you need people that are not in this crazy bubble that can add perspective. It's good to check in from time to time. Those are three things that have helped me. They seem really simple, but the simpler things are usually the most effective.

When we started, we just wanted people to use the product. It was really about customer acquisition, getting not just internal stakeholders but also external stakeholders to have complete belief in the product. I think we achieved that. Today we have over six million customers, and they're quite active. They do about four and a half billion dollars every single month in transaction value. That's quite a lot, coming mostly from Nigeria. The next phase is truly making the business super sustainable, getting the most out of monetization from all the traffic we have on the app. There's a real focus on that. The kind of products we're going to focus on going forward are those that generate exponential revenue. I think that's super important, especially today in the tech sector where we've gone beyond a growth at all cost mentality to a more sustainable approach to growing a business. It's still a business at the end of the day, not just a fancy app that can get the most users. You have to make money. So that's a big focus for us now: increase revenues, focus on profitability, unit economics, and all that good stuff that makes a business sustainable.

Now it's kind of expected. Before, I remember celebrating the first 100 customers and first 1,000 customers. But now, we expect people to use the product. It works, there's adoption, there's product market fit. Now we just have to turn it into a monster business that can grow and also steer it towards more of an organization, institutionalizing processes. The stakes are much higher now. We have so many more customers, about 500 staff who have families. It's a startup, but it's now serious. There are a lot of things we are doing to make sure it's run as a proper institution, but still with that startup mentality of speed and agility. I don't really get a chance to think a lot about those numbers. They're impressive, but if the product is good and it's wanted, it should be expected.

Absolutely. There are definitely similarities, but the way you go about it is very different. It's a completely different environment. I'll give an example. If you take cards, physical cards, most neobanks in Europe and America probably don't think too much about the delivery of those cards. It's pretty straightforward. There are lots of delivery companies, the national mail system works well. We've had to think about creative ways to deliver cards. Logistics is not like there are big logistics companies. Even addressing is not a foregone conclusion. We had to implement things like landmarks and have more descriptive information when inputting your address for card delivery. There's just more work to do because there's more infrastructural deficit in delivering this service. It still feels like a normal app where you click a few buttons and things happen, but in the background there's a lot more work to get to that seamless experience for the customer. That's why it's probably even more appreciated because everybody knows it's so difficult to get this done. If you look at credit, the interest rates for credit in England and America are not that high. In emerging markets, it's quite common for it to be double digits. Traditional banks would do about 25-30% per annum. If we're able to do the same or slightly higher, it gives room for a bigger opportunity to earn revenue. The role of a bank is to gather deposits and leverage those deposits into money making, either through credit or through placements in government bonds. Emerging markets give you that ability because the returns are so high on a key product of what is typically associated with a bank, which a more developed environment doesn't give you. There are advantages and disadvantages. That's why we focused on being a bank and having a license from day one, instead of just focusing purely on the experience and speed. The opportunity was much bigger to be able to do actual bank things from day one.

I wouldn't say we've had a near-death moment, but we've definitely had products that we were very excited about that just never took off. We've also had products that we built because we felt we needed to have them as a sticky or retention product, but actually they really took off and we were able to monetize them significantly. The trick is to be fast, iterate quickly. If you see it doesn't work, move on pretty quickly. You can do lots of research beforehand before you release a product, but we've been quite lucky not to stare death in the face as of yet, and hopefully we never will.

I would love to have dinner with David Beckham. He actually lives very close to me in London, in Holland Park, so I'm hoping maybe we can bump into each other and be friends. I like his passion, his resilience, and he gets the best out of whatever he has, which is what every founder should be like. David Velez, who's the founder of Nubank, just because I love Nubank. I think it's the gold standard for our industry of digital banking. The third would be Beyoncé, just because of sheer work ethic, longevity, being able to do it all: accomplish as a parent, a wife, an entertainer, a business woman. These things require a lot of hard work and dedication. These are people that have seized the opportunity presented to them and used it really well. I would love to spend time just talking to them.

Thank you for having me.