INSUBCONTINENT EXCLUSIVE:
Asia fintech scene is poised to get a little larger after Jumo, a company that offers loans to the unbanked in Africa, revealed plans to
expand into the continent
To get the ball rolling,Jumo has opened an office in Singapore to lead the way and landed a massive $52 million investment led by banking
giant Goldman Sachs to fuel the growth.
The new round takes Jumo to $90 million raised from investors
While Goldman is the lead — and standout name — the round also saw participation from existing backers that includeProparco — which is
attached to the French Development Agency — Finnfund, Vostok Emerging Finance, Gemcorp Capital, and LeapFrog Investments.
Jumo launched in
2014 and it specializes in social impact financial products
That meansloans and saving options for those who sit outside of the existing banking system, and particularly small businesses
To date, it claims to have helped nine million consumers across its six markets in Africa and originated over $700 million in loans
The company, which has some 350 staff across 10 offices in Africa, Europe and Asia, was part of Google Launchpad accelerator last year and
it is led by CEOAndrew Watkins-Ball, who has close to two decades in finance and investing.
Watkins-Ball told TechCrunch that he believes
Jumo experience working in Africa sets it up perfectly to offer similar services in markets across Asia.
We grew up in a very tough play
yard,& he said in an interview
&We built our initial success inTanzania which is probably one of the hardest [financial] markets in the world
A lot of these environments [in Asia] look more attractive.
Unlike the West, where challengers are trying to unseat banks, fintech startups
in emerging markets work with the existing system
That isn''t some cop-out, it actually makes perfect sense
Banks simply aren''t equipped to deal with customers seeking small loans in the hundreds of United States dollar bracket.
Jumo CEO Andrew
Watkins-Ball believes his company work in Africa is ideal preparation for its expansion into Asia
Financially, the returns aren''t there
from these customers and it doesn''t make sense for banks to invest resources sounding out a prospective loan
Even if they wanted to, they couldn''t vet these would-be customers, though
Many emerging markets simply don''t have the formalized credit checking systems that exist in the West, while many of the unbanked (or
‘less banked&) consumers wouldn''t even show up if they did due to a range of factors.
That where a new approach is needed
Fintech startups essentially act like a funnel
They manage the customer acquisition and retention, develop systems to assess credit based on alternative signals and, over time, build up a
customer profile that reduces credit risk
That suits banks because they don''t need to handle the nitty-gritty and, when it works well, the startups bring them larger enough volumes
of small loans that are a worthwhile opportunity for financial institutions.
Just looking at recent funding deals, the model is evident in
markets like India — where ZestMoney pulled in funds last month — and Southeast Asia, where Experian backed fintech startup
C88.
Watkins-Ball said Jumo is aiming to do the same having already proven its model in Africa
He acknowledged that a number of startups are also tackling the problem and welcomed the increase competition and growth potential across
the fintech and micro-financing space.
We&ve offered services to millions of new customers who weren''t part of the banking ecosystems,& he
explained.&Essentially we grow the addressable market for banks.
Already, Jumo has begun offering services in Pakistan and it has plans to
open up in more markets in Asia, althoughWatkins-Ball isn''t saying which ones or when right now
But, in addition to proving its model, he believes that Jumo has already shown it can adapt to new markets.
The differences between
countries like Ghana, Tanzania and Zambia are as great as those between India, China and Indonesia,& he told TechCrunch
&So we&ve had to learn to use ourplatform, which we built to be flexible, and localize in order to fit the customer.
That backed up by
Goldman Sachs executive directorJules Frebault, who said in a statement: &There an immense opportunityacross Africa and beyond for Jumo to
build on their successful track record developing digitalmarketplace infrastructure to offer mobile subscribers access to relevant financial
products.
In addition to Asian expansions, Jumo new capital will also go towards expanding its current selection of productions in Africa
In particular,Watkins-Ball says the company is working to partner with more banks and it plans to introduce &new generations& of saving
products.
While it isn''t taking its foot off the pedal in Africa, he said Jumo will likely devote the majority of its resources to the Asia
That&ll make Jumo a very notable addition to a fintech scene that is already showing significant potential across the Asian region.
