The neobanking wave is beginning to take shape in Africa, particularly Nigeria, where new fintechs are trying to take over legacy banks by providing cheaper and more personalized banking services..
Sparkle, founded by a former CEO of a former Nigerian incumbent bank, is one such fintech and has closed a $ 3.1 million seed round to scale operations.
Nigerians have a love-hate relationship with traditional banks. although the number of active bank accounts in the country is above 100 million (out of a population of approximately 200 million), problems related to ineffective service delivery, serial downtimes, and bad loans and experiences have made many people distrustful of banking services.
Neobanks saw an opportunity and are competing for the attention of these banked but dissatisfied customers. Sparkle, like any neobank on the market, has standard features such as savings, bill pay, top-ups, request or send funds, as well as less common features, such as bill splitting and expense breakdown review, to attract customers in a market.
“We are quite different in a way because instead of separating financial services from lifestyle, we have tried to bring them together, especially as we have seen more people beginning to lead more digitally driven lives,” CEO Uzoma dozie told TechCrunch in an interview.
“It means that we do not look at our clients from the perspective of accounts, payments, deposits or credit, but from how we can help them do what they want to do at a given time.. “So that’s Sparkle’s point: providing business, lifestyle and financial support services to Nigerians.
In April, the company launched Sparkle Business to acquire a different set of underserved users: small and medium-sized businesses.. Sparkle says the new business branch has caught on well with this category, which now has access to inventory and invoice management, tax advice, and payroll and employee management services..
These businesses can access these features with a tax identification number (TIN) and email address, the lowest form of documentation on the market for businesses..
Sparkle’s combination of banking services to individuals and businesses on a single platform is unique. Other neo banks in the country – such as Kuda, VBank, FairMoney and Carbon – they are known to offer customized services to individuals. At the same time, the platforms that include Brass and Prospa accommodate different sizes of companies..
“As a small business, I don’t carry my bank account on my mobile. I run my business. So we bring everything related to your business together in one place so you can do business wherever you are, ”said Dozie. “For people, we are bringing everything together in one place so that they can do what they want to do. easily Wherever you are. But the bottom line is that we are giving you the information you need to make spontaneous decisions. “
Dozie highlights some Sparkle features that customers could hardly get with other platforms. For example, customers can check transaction history with a particular payee without navigating through a financial statement, confirming the location where they made each transaction, and schedule payments.
Sparkle’s design also suits the way most Nigerians operate their lives offline. Clients can I have multiple accounts (personal and business) and change whenever they want in Sparkle. They can use the platform in various phones with the same enhanced security as other platforms that allow you to log in on a single phone, Dozie said.
Since its launch last year, the neobank has acquired more than 40,000 clients in the individual banking sector and 2,000 companies. The company began charging individual clients small fees to keep their accounts running and plans to charge businesses for most functions except tax services, Dozie said..
Like most digital banks in the country, Sparkle has a microfinance banking license. A partnership with Visa has also been secured to allow users to make in-person or digital payments with a Visa card. Other partnerships are with companies such as Network International and PwC Nigeria.
Anyone who knows how the Nigerian fintech space works knows that it can take some time to obtain licenses and partnerships. Sparkle has been able to do it in less than a year due to the vast experience and connections of its CEO.
Before Sparkle, Dozie was the CEO and last group managing director of Diamond Bank. Hey oversaw the bank’s corporate, commercial and retail branches prior to its merger with Access Bank; the business now has 29 million customers.
With Sparkle, Dozie is interested in expanding the capabilities of Nigeria’s banking and retail sectors, picking up where he left off at Diamond Bank. As an investor himself, he recruited an all-Nigerian cast for his initial round – main investor Leadway Assurance, Trium Network participant, and a few high-net-worth anonymous individuals. The reversal comes after Sparkle closed a friends and family rounds prior to planting $ 2 million over the past year.
He opined that while he could have raised money from foreign investors, he chose to go with this group of investors because they provide the experience and market that Sparkle needs to scale in Nigeria.. He was also interested in getting high net worth individuals to invest in a technology company.
“CollectivelyAs a group of investors and business builders, we are Nigerians who are optimistic about Nigeria and the opportunity the country presents. in terms of build global networks and communities, all through one app, ”the CEO said in a statement..
The CEO told TechCrunch that Sparkle will use the investment for two purposes: developing robotic process automation to help with mundane and repetitive processes, and then hiring talent in engineering, financial risk and marketing.