ABA Editorial · Jun 17, 2025 · 15 min read
Kuda began in 2017 as Kudimoney, an online lending and savings platform founded by a former PwC engagement manager and a software developer. By January 2026, the Central Bank of Nigeria had upgraded its Nigerian subsidiary to full national banking status. In between those two events is one of the clearest stories of an African neobank growing up into a regulated financial institution.
When Babs Ogundeyi and Musty Mustapha registered Kudimoney in 2017, the Nigerian digital banking market looked very different from what it is in 2026. Commercial banks dominated consumer financial services with high fees, poor customer experience, and limited digital product depth. Mobile money was growing but fragmented. The idea of a fully digital Nigerian bank existed mostly in investor decks rather than in the hands of actual customers. The founders of what would become Kuda Bank were not the first to try, but they were one of the first to combine credible financial services expertise with the engineering discipline to build a product that worked. This is the story of how Kudimoney became Kuda, how Kuda became Africa's most visible neobank, and how Kuda then became an actual bank under a national license.
Babs Ogundeyi came to fintech from an unusual path. He spent nearly a decade at PwC as an engagement manager leading audit and advisory work for African banks, then left in 2011 to serve as Special Adviser on Finance to the Governor of Oyo State in Nigeria. In that role he led a NGN 55 billion bond raise, set up the state's Public-Private Partnership and Debt Management offices, and turned a state microfinance bank around from a USD 2 million loss position into profitability within four years. By the time he came to launch Kudimoney, he had seen African banking from both the auditor's seat and the government's seat, which gave him a clearer view of the regulatory and operational constraints than most first-time fintech founders.
Musty Mustapha brought the engineering discipline. The two co-founders combined a CEO with deep financial services and regulatory experience with a CTO capable of building the product itself, which is exactly the combination African fintech startups most often lack. Many of the sector's failures in the 2019-2022 period involved either strong engineers without regulatory savvy or strong financiers without engineering delivery capacity. Kuda had both.
The product was Kudimoney, an online lending and savings platform that launched in 2017. The initial pitch was straightforward: a digital-first way for Nigerians to save and borrow, with a clean mobile interface and lower friction than commercial bank alternatives. The business was capital-efficient and focused on a specific product rather than trying to become a full bank overnight.
The pivot came in 2019, when the company received a microfinance bank license from the Central Bank of Nigeria and rebranded from Kudimoney to Kuda. The license was not a full banking license at that stage, but it was a crucial regulatory step because it allowed the company to offer actual bank accounts to Nigerian customers rather than operating as a thinly-wrapped savings product. The rebrand was a signal as much as a business decision: Kuda was positioning itself as a bank, not as a lending app.
The Kuda app launched in August 2019 with a specific value proposition: zero banking fees, a free debit card, and a clean mobile experience. The proposition resonated with young Nigerian customers who had grown tired of paying NGN 50 here and NGN 105 there in fees that commercial banks charged for routine transactions. The launch was followed in September 2019 by a USD 1.6 million pre-seed round, which provided the initial operating capital for growth.
Kuda's fundraising trajectory is worth examining because it shows how African fintech valuation and investor appetite shifted between 2019 and 2022. In November 2020, Kuda closed a USD 10 million seed round led by Target Global, a significant step up from the 2019 pre-seed. The company then raised a USD 25 million Series A in early 2021, followed just months later by a USD 55 million Series B at a USD 500 million valuation in August 2021. The series B valuation, roughly equivalent to NGN 205.75 billion at the prevailing exchange rate, reflected the peak of African fintech venture appetite in the early 2020s.
The August 2021 Series B came at a moment when pan-African fintech was receiving more capital than it had ever seen, and Kuda rode the wave. Cumulative funding across rounds totaled approximately USD 91.5 million. By the time the 2022-2023 African venture capital reset arrived, Kuda had enough capital to continue scaling through the downturn, which is one of the reasons the company survived a period that shut down several of its competitors.
By the mid-2020s Kuda had over 7 million customers in Nigeria and had styled itself as "the money app for Africans." The company processed transaction volumes that competed with mid-sized Nigerian commercial banks. Its app consistently ranked among the most-downloaded financial apps in Nigeria. By 2025, Kuda's total transaction volume had exceeded NGN 14 trillion, according to market reporting.
But scale brought specific challenges that reshaped the business. Customer acquisition through a free-service model produced rapid user growth but limited revenue per customer. Most deposits at Nigerian neobanks remained small, and the thin margin structure meant that Kuda had to introduce more revenue-generating products (credit, overdrafts, paid features) to improve unit economics. The shift from pure deposit bank to diversified financial services provider is a journey every serious consumer fintech eventually takes, and Kuda's move into lending products was a necessary consequence of the economics that deposit-led neobanks face globally.
Kuda also faced the challenge that every African neobank faces when it reaches scale: the transition from "fintech startup" to "regulated financial institution." The infrastructure, compliance, and operational discipline required to run millions of customer accounts safely is not something a company can bolt on after growth. It has to be built into the culture and systems as the company scales, and doing so while also growing the customer base is one of the hardest things in African financial services.
In December 2025, Kuda's Nigerian subsidiary Kuda Microfinance Bank was granted a national microfinance banking license by the Central Bank of Nigeria, allowing it to expand physically across the country. In January 2026, that license was upgraded to full national operating status, placing Kuda in the same regulatory category as Nigeria's commercial banks in certain respects. This was the moment when Kuda stopped being a neobank in any meaningful sense and became simply a bank with good technology.
The upgrade brought obligations along with privileges. Kuda now had to meet stricter compliance rules, higher capital requirements, and closer supervisory engagement than it had under the microfinance framework. It was expected to maintain physical touchpoints in key Nigerian cities, improve customer service structures, and strengthen internal controls around know-your-customer and anti-money-laundering processes. These were not trivial operational changes. They required hiring senior compliance officers, building out risk management infrastructure, and restructuring internal governance to meet supervisory expectations.
In March 2024, Kuda acquired payment licenses to offer remittance and multicurrency wallet services in Tanzania and Canada, positioning itself as a global neobank for Africans rather than a Nigeria-only operator. The Tanzania and Canada licenses reflected a specific strategic choice: serve African diaspora customers in their countries of residence while maintaining the primary banking relationship with Nigerian customers at home. This is a different international expansion model from TymeBank's Indonesian expansion or from Ecobank's pan-African retail presence. It is diaspora-first rather than continental-first, and it matches the customer base that a Nigerian-origin neobank can most naturally extend to.
Three things, in the view of practitioners who have watched the company from close range. First, the founding team combination was unusual for African fintech. A CEO with regulatory and financial services depth plus a CTO with engineering delivery capacity is a structural advantage that many competitors lacked. Second, the company chose to pursue formal regulatory standing (the microfinance bank license, then the national upgrade) rather than trying to operate indefinitely in grey areas. This cost time and capital but produced a company that could survive the regulatory tightening of the mid-2020s. Third, Kuda raised enough capital during the 2020-2021 boom to have runway through the 2022-2023 venture reset, which allowed it to continue scaling while some competitors had to retrench.
The unit economics question has not yet been fully answered. Kuda has grown to millions of customers on a largely free-service proposition, and the revenue per customer is modest compared to traditional banks serving the same customer base. Whether the company can improve its net interest margin, reduce its cost-to-income ratio, and deliver sustainable profitability at scale is the question that will define its next three years. The upgraded banking license creates new opportunities (wider product scope, deposit gathering at scale, eligibility for interbank activities) but also new cost pressures (compliance, infrastructure, supervisory engagement).
The international expansion is also still a bet rather than a proven result. Tanzania and Canada are very different markets, and building a credible banking operation in either is a multi-year project. Whether Kuda can execute across geographies the way TymeBank is attempting to in Southeast Asia remains to be seen.
Kuda's story is significant beyond the company itself because it represents the path that a successful African neobank can credibly take: from a modest product launch to a regulated bank with millions of customers and a national license, all in roughly seven years. That path is not the only one, and it is not the easiest. But it shows that the "neobank" category is not a permanent identity. It is a transition state, and the companies that navigate the transition successfully become banks. Kuda is now a bank. The next phase of its story will be whether it can be a good one.