If you want to get into the banking industry, you have to go all out to find a microfinance bank license. The first thing you need to do is to take the exam. Once you have obtained the license, you can then get your banking career off the ground. However, to get your career off the ground, you have to have a solid plan that outlines how you will achieve your goal. This means figuring out how you will raise funding, getting a microfinance bank license, and having a full-fledged banking experience by the end of the year.
Raising EUR10 million in September 2019
The European fintech startup FairMoney raised EUR10 million in September 2019 with partners including Flourish Ventures, DST Global Partners and Speedinvest. They’ve got their fingers in many pies, but one of the most interesting is the loan product that enables micro-businesses to get funding on the spot. Besides offering instant loans, FairMoney also offers micro-credit. These loans are underwritten on a proprietary algorithm.
The fintech startup has made several moves in its quest to become the go-to financial provider for underserved consumers in big emerging markets. For instance, the company has recently acquired a microfinance bank license, and has started offering the aforementioned credit-enabled mobile app. Moreover, it has recently convinced a number of investment banks to invest in an unlisted bond. In addition, it has released an app that allows users to buy airtime and pay for other services like utility bills.
Another impressive feat is the fact that the company has a 3.5-million-strong user base. Its mobile app has been able to process 500,000 loan applications from more than 100,000 unique users. Lastly, it has managed to process and disburse $93 million in loans to over 1.3 million customers.
Getting a microfinance bank license
If you’re interested in getting a microfinance bank license in Nigeria, you’ll need to follow a number of steps. The process starts with collecting the necessary documents and gathering information. It also includes a detailed feasibility study that highlights the viability of your MF banking proposal.
Microfinance Banks provide financial services for low-income people. They lend to artisans, farmers, young people and non-salaried workers. In addition to lending, the banks also deal with deposits and domestic money transfers. However, it is important to note that the central bank of Nigeria has a number of restrictions on these activities.
For example, the MFB cannot engage in international money transactions. Furthermore, it must not accept or make loans that exceed grants or concessional funds. Moreover, the bank must be certified by a private, independent credit rating agency.
Depending on the type of microfinance bank you want to set up, there are different licensing requirements. Some MFIs operate informally, while others are formal.
Neobanks’ model of venture capital funding for consumer fintech startups
Neobanks, also known as challenger banks, are new types of financial institutions. They provide services to a wide range of consumers, often offering free bank accounts for low-income users. Some of the most popular neobanks are Monzo, Revolut, and Starling.
Unlike conventional financial institutions, neobanks operate exclusively online. Users can access their accounts via the web or a mobile app. Many neobanks offer features like early direct deposit and no-fee overdrafts. These services help to simplify personal finance management.
Neobanks have raised billions in venture capital over the past decade. This investment has helped them build up bases of millions of customer accounts. However, their offerings are still not comprehensive enough to compete with traditional brick-and-mortar institutions. The neobank ecosystem is crowded.
While the number of challenger banks is growing, they haven’t always been successful. In the U.S., BBVA has shuttered two acquisitions and Xinja, an Australian neobank, closed in late 2020.
