Fintech Farm, a recently founded fintech business located in the United Kingdom that produces digital banks in developing economies, has acquired $7.4 million in initial investment, according to TechCrunch.
Flyer One Ventures and Solid led the seed round. TA Ventures, Jiji, u.ventures, and AVentures Capital were among the other investors. The funding will be used to develop neobanks in eight countries over the following 24 months, according to the business.
Digital banks, neobanks, challenger banks, or whatever you want to call them, are one of the most popular beneficiaries of venture capital funding in the fintech industry. Hundreds have sprouted up throughout the world in recent years, attempting to challenge incumbents in their particular businesses.
In Eastern Europe, for example, Ukrainian neobank Monobank claims to have attracted over 4.5 million clients and over $100 million in income in only a few years of existence. Dmytro Dubilet, one of Monobank’s co-founders and chief technology officer, wants to replicate the business’s success in developing regions with his new startup.
He founded Fintech Farm alongside Middleware creator Alexander Vityaz and Nick Bezkrovnyy, a former director at KPMG U.K. where he headed M&A in global fintech.
Fintech Farm entered its first country, Azerbaijan, in November 2021, using a credit-led neobank model to provide loans to consumers with poor credit histories through cards and a mobile app.
Fintech Farm’s operating plan in Azerbaijan and other countries, according to Dubilet, is to deploy its app via partnerships with local banks.
When asked how this cooperation works, he said, “Usually, it’s a 50-50 partnership with a local bank.” Fintech Farm, he claims, is in charge of the commercial side of things, including the app and credit decision-making procedures. The licence and money are held by the partner bank, which has local experience since both parties contribute equally in the firm.
Fintech Farm is a U.K.-based fintech that takes a different strategy than the traditional model in the nation and Europe, where neobanks (Monzo, Starling Bank, Revolut) choose to have their own banking licence and provide their own set of financial services.
However, given its operational strategy, which is to provide financial services to developing regions, a distinct business model makes sense. Fintech Farm has a new name in each nation where it opens, but the same design and mascot — a comical lion with a lilac mane — is used everywhere.
Fintech Farm has issued over 100,000 cards in Azerbaijan since its start as Leobank two months ago; by the end of the year, it expects to reach a million.
Fintech Farm also wants to reach eight new countries spanning Africa and Asia over the next two years, the first of which is Nigeria.
“We want to create comparable operations in roughly eight more areas, all of which are somewhat larger than Azerbaijan,” Dubilet added. “Actually, our next market is going to be Nigeria; we’ve visited Nigeria a number of times and it’s one of our favourite nations,” Dubilet said, adding that the launch would most likely happen in the first quarter 2022.
In the meanwhile, despite the company’s initial goal to collaborate with a bank in each nation it enters, Fintech Farm has had the opposite effect in Nigeria so far. Currently, the firm has obtained its own microfinance banking licence, which is needed of most fintechs in the nation. Fintech Farm will collaborate with a bank after it reaches 200,000 users, according to the founders. Aside from licence and infrastructure assistance, Bezkrovnyy believes that the speed with which a partner bank can attract millions of clients and issue hundreds of millions of dollars in loans will be a deciding factor in selecting a partner bank.
Fintech Farm’s main product is a debit card that can be used to withdraw monies from bank accounts and a credit card that has a lending facility linked to it in the customer’s name. Some of the app’s features include a savings account, deposits, and transfers.
Nigerians are eager for credit, and Fintech Farm’s credit-led neobank will help supply that need (the majority of its income comes from these loans), much as firms like FairMoney and Carbon have done for years. Fintech Farm, unlike these local neobanks, seeks to leverage credit cards to deliver more affordable and accessible financing.
“In terms of credit, we believe there is a market for a “mass credit card” in Nigeria. Traditional bank credit cards are now only available to the upper-middle class,” Bezkrovnyy said in a statement. “APRs on loan offers from neobanks and alternative lenders may likely be above 100% at the same time.” We will fill this need by accepting those consumers who have been overlooked by conventional banks and providing them with competitive interest rates.”
Because the West African country lacks an advanced credit bureau system to document people’s credit histories, unlike most affluent countries, there is considerable scepticism over how Fintech Farm would utilise credit cards to function. However, Dubilet remains optimistic, citing the company’s data science staff, which he defines as “one of the greatest in the world.”
Vladimir Mnogoletniy, co-founder of Genesis, the parent firm of African online classifieds portal Jiji, will join Fintech Farm’s board as part of this funding round. He’s also a partner at Flyer One, a co-lead investor.
Mnogoletniy and his team’s knowledge and understanding, according to Fintech Farm’s founders, will be critical to the company’s success.
Jiji, which has established one of the biggest e-commerce platforms in terms of GMV, was seeking for the ideal partner to enter neobanking, according to Mnogoletniy, and investing in Fintech Farm was a smart investment in that direction.
Fintech Farm expects to spend substantially on marketing and acquiring people, particularly engineers and data scientists, as it leverages the money to carry out its development goals.
Subtly charming pop culture geek. Amateur analyst. Freelance tv buff. Coffee lover