Branch International, an Andreessen-backed startup, is in the running to become a pan-African digital bank, Bloomberg reported on Tuesday (March 1).
The microfinance company now sees an opportunity for growth in online financial services in Africa.
The company has operations in India, Nigeria, Kenya and Ghana, and it plans to grow its business by buying microfinance lenders, according to Matt Flannery, founder and CEO.
He said the new deals, including some in Tanzania, will strengthen Branch’s position as the first fintech to buy banks in sub-Saharan Africa.
“The creation of a truly pan-African digital bank is long overdue,” Flannery said, speaking from Kenya’s capital, Nairobi, adding that there is a “real need” for a “sort of borderless bank” that may accept deposits and offer small loans.
Branch has already issued more than $600 million in loans since 2015. The FinTech model uses machine learning to determine a borrower’s creditworthiness.
The company is backed by venture capitalist Andreessen Horowitz, as well as CreditEase Fintech Investment Fund and International Finance Corp.
Flannery said the idea was to offer multiple financial products under different licenses across sub-Saharan Africa.
He said the company’s plan was to expand into Tanzania, Uganda, Nigeria or Ghana.
Bloomberg wrote that because many people in Africa use digital mobile wallets, the country is fertile ground for the new financial model.
Read more: Mobile FinTech Products Paving the Way for Financial Inclusion in Nigeria
PYMNTS wrote recently that Nigerian businesses struggle to find financial solutions, due to underdeveloped financial and physical infrastructure.
Annual interest rates there are 24% to 30%, and these factors have contributed to keeping many people excluded from the banking system because they cannot find finance.
However, Nigeria and Sub-Saharan Africa have the advantage of high mobile penetration rates, using them as payment platforms that predated Venmo. This means there is potential for companies that can reach a mobile base.