In 2015, the emergence of fintechs such as Flutterwave and Paystack changed the game for online businesses in Africa by making it easier to integrate payments into customer interfaces without building these features from scratch or merging with tacky foreign software. .
Amplify was another payment platform launched during this period. However, it has differentiated itself by engaging in payments on social media platforms, which was of interest to Nigerian digital bank Carbon when it acquired the startup in 2019.
At the time, the co-founder and CEO of the startup, Segun Adeyemi, said he was taking a break and would “probably start another business” later. While working as the Nigeria country manager for JUMO, a South African fintech that provides credit infrastructure to major mobile money operators across Africa, Adeyemi resigned last year to launch Anchor, another fintech of which he is also the managing director, in February. The new company is akin to Amplify in terms of infrastructural gaming; however, it provides financial features instead of payment ones. Adeyemi launched fintech with Olamide Sobowale and Gbekeloluwa Olufotebi.
“We are now seeing a new development where companies want to offer different financial products and services beyond just payments,” Adeyemi told TechCrunch on a call. “We believe that the solution is not just to lock the bank as a service into a payment platform, but that there must be a real bank as a service platform built with the right infrastructure. and the right go-to-market strategy is the problem we set out to solve as a team, basically the complete end-to-end infrastructure for startups to build, integrate and launch financial services.
Banking platforms as a service (BaaS) are one of the hottest segments in the global fintech space, with startups like Unit and Rapyd reaching unicorn valuations and older startups like Stripe offering similar services. These platforms have become popular with neo-banks or startups from different segments trying to integrate financial services into their offerings, as the large incumbent banks have been relatively slow to upgrade their services with the pace of changes in the world of technology and banking. As such, banking-as-a-service platforms see an opportunity to provide more personalized services and flexibility at lower cost.
The situation is no different in Africa. Although fintech accounted for more than 60% of venture capital dollars last year and the proliferation of financial services, building a fintech startup is a long and costly undertaking. According to reports, it can take up to 18 months and an average of $500,000 to launch a fintech on the continent as they deal with issues ranging from licensing and compliance processes and multiple layers of integration management of third-party relationships and basic banking infrastructure.
Anchor wants to “abstract these complexities” so that pure fintechs and companies offering integrated financing can get started in 5 minutes, Adeyemi said in a statement. “For startups building a large-scale digital bank or providing integrated financing, we can provide compliance coverage that allows them to get started quickly. So, from build to launch to integration, our goal is to figure out how to do it all in the shortest possible time without compromising security, compliance, and scalability. That’s our value proposition,” he added on the call.
The seven-month-old startup provides APIs, dashboards and tools that help developers integrate and create banking products such as bank accounts, remittances, savings products, card issuance and the supply of loans.
Anchor, accepted into Y Combinator’s summer batch this year as the continent’s first banking platform as a service, went live with its private beta in May. More than 30 startups have joined, including Pivo, another YC S22-backed company, Outpost Health, Dillali and Pennee. Anchor claims to do multi-million dollar trades while growing 200% month over month. The startup generates revenue by charging fees and taking discounts on every billable part of the business: account issuance, money movement, savings and deposits, among others.
After testing these features with a select few, Anchor sneaks out with a $1 million+ pre-seed and takes its platform public. Anchor plans to use this investment to attract top talent, improve the company’s technology infrastructure, invest in compliance and regulatory infrastructure, and acquire customers. Investors backing fintech BaaS include Byld Ventures, Y Combinator, Luno Expeditions, Niche Capital, Mountain Peak Capital, and angel investors such as SeamlessHR CEO Emmanuel Okeleji.
Meanwhile, Anchor is not the only company trying to simplify the way businesses deliver financial services in Nigeria and Africa. Other startups, such as Bloc, have identified this same opportunity, and larger fintechs like Flutterwave also seek to exploit this market. Adeyemi says the founding team’s technical background, attention to security and scalability, and the speed at which companies can bring its platform online give Anchor an edge. While the CEO was building Amplify, the startup’s CTO Sobowale worked at four leading Nigerian fintechs: AppZone, TeamApt, Kuda and Carbon and Olufotebi was a full stack developer at Booking.com, where he built operations software financial.
“There is an understanding of the space as the founders and the core team building it. We have witnessed first-hand the painful process of entering into banking partnerships, negotiating contracts with third parties and obtaining regulatory approvals. And more generally, the considerable time and effort required to launch financial products,” said the CEO.
“We’re maximizing speed to market while not compromising on security and scalability. So there are a lot of use cases that we’ve built for, that if you’re starting from scratch, it’s going to take you a while to start the stage.
The CEO also highlighted how Anchor has created a network effect with its service where the more platforms it integrates, the stronger its infrastructure and support system. Companies must also consider high switching costs when using BaaS platforms, and for a startup like Anchor, being first to move is a sustainable competitive advantage, he added.