Kwara: A true cooperative spirit

Kwara: A true cooperative spirit

Kwara provides secure, simple and affordable online and mobile banking for SACCOs, also known as credit unions and community banks. In 2018, the Nairobi- and Berlin-based businesses set out to empower finance cooperatives in emerging markets to meet their members’ needs instantly and help them avoid expensive predatory alternatives.

Empowering SACCOs.

Kwara began its journey in Nairobi because Kenya is the world’s largest market for finance cooperatives and one of the earliest fintech adopters, thanks to a successful launch of M-Pesa, a mobile phone-based money transfer service by Vodafone and Safaricom, in 2007. While SACCOs are the economy’s major drivers, they tend to be slow, not digitized, and cut off from the resources, capacity, and structure of incumbent banks. A severely underserved market, financial cooperatives often find themselves trapped on a desktop having settled for ad hoc, custom-built systems with expensive pricing and add ons.

Aiming to facilitate SACCOs’ inclusion into the formal financial ecosystem and let them enjoy the benefits of the entire sector, Kwara envisioned a standardised, affordable and future-proof digital banking platform that required an infinitely scalable, cloud-native foundation.

How multi-accelerated Kenyan fintech startup Kwara is building an international operation

Kenyan fintech startup Kwara, which is helping to turn traditional savings cooperatives into modern digital banks, has been taking part in a number of accelerators lately, but behind the scenes it is getting plenty of other work done.

Founded in 2018 by Cynthia Wandia and David Hwan, Kwara has built a digital banking platform designed to help unbanked and underbanked individuals to build wealth together in a frictionless way. 

It offers a management platform to drive efficiency and automation at the cooperative staff level, and also has a neobank-style mobile banking app for end-clients, alongside alternative channels. Meanwhile, Kwara connects the savings cooperatives with banks, payment gateways and other third parties through an open API. This all comes in one software-as-a-service package, meaning cooperative clients pay for their usage and get a single end-to-end solution.

“Savings and credit cooperatives – in Kenya called SACCOs, in other countries sometimes referred to as credit unions – are strong, historical financial institutions with a unique feature: the depositors are also shareholders, meaning the interests are fundamentally aligned,” Wandia told Disrupt Africa. 

“These institutions allow people at the last mile to save and earn high interest, as well as borrow at fair rates. The current digital solutions for savings and credit cooperatives are however not fit for purpose. That means the pricing does not fit their budgets, security is frail or the system is unfriendly to users.”

Kwara has built a platform from the ground up, which aims to address the unique pain points cooperatives go through. 

“We have proven to outperform simple, cheap solutions such as Excel, as well as complex solutions such as global core banking systems,” said Wandia.

Of late, Kwara has been getting accelerated, a lot. In the last couple of months alone it has taken part in the Norrsken Impact Accelerator and the NINJA Accelerator powered by the Japan International Cooperation Agency (JICA). Back in 2019 it took part in the Google Launchpad Africa programme, and that same year it was named in the Inclusive Fintech 50.

Taking part in so many programmes has not distracted the startup from its core purpose, however, and Wandia said Kwara has seen rapid growth this year. It has acquired 30 cooperative clients across Kenya, South Africa and the Philippines, serving more than 50,000 members.

“We currently consistently close and onboard smaller cooperatives, and have been able to show the global product-market fit by signing and onboarding clients across South Africa and the Philippines. In addition, during the peak of the COVID-19 restrictions last year, we launched a trial version called Kwara Pronto,” said Wandia. 

“We have shown that those trials lead to an 85 per cent conversion rate, with all who had the funds to continue becoming paying clients. Another important sign of strong uptake is that we closed one of the largest savings and credit cooperatives in Kenya, who have over 25,000 members.”

Kwara is now looking to deepen revenue in Kenya, its “beachhead market” where 95 per cent of its business lies, as well as start looking to moves into further markets in ASEAN and Latin America. The startup has cash in the bank to help it scale, having secured backing from the likes of German venture builder Finparx, Kepple Africa Ventures, Bright Continent Capital, and European angel investors that include the COO of Google UK.

The startup charges a monthly subscription fee, ranging from US$300 per month to US$10,000 per month, depending on the cooperative needs, but Wandia said it has to work hard to earn the trust of customers.

“Our clients have been locked in by incumbents or have had products not meet expectations repeatedly. This means we need to rebuild their trust, and fast. One of the ways we do so is through a trial – by offering our platform for free for two months, cooperatives get to experience the superior user experience and platform reliability for themselves, which is always the best way to show what you have to offer,” she said.

It also ensures it helps cooperatives from a digital skills perspective.

“Automation with the Kwara platform results in new, condensed and more efficient workflows, as well as placing more control in the members hands, which initially gave rise to hesitation from staff who feared redundancy,” said Wandia. 

“We make a commitment to re-skill or upskill the staff at our clients through a fully online training programme, giving them the confidence to take on their new and more expanded roles for a future-proof cooperative that is ready for 4x growth above the market average.”

A multi-accelerate Kwara has itself seen impressive growth, and with the additional support secured this year it has ambitious plans for the future.

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