Nigeria has an average of 4.8 bank branches and 19 ATMs per 100,000 adults, in contrast to the world average of 13 bank branches and 40 ATMs. Reports additionally say that lower than one-third of Nigerian adults have access to a financial institution department or ATM inside one kilometer of the place they stay.
This problem in accessing monetary companies, particularly for the unbanked and underbanked, has given rise to company banking. This branchless banking mannequin extends monetary companies to the final mile through a community of brokers. It’s a thriving enterprise for banks, bigger fintechs similar to OPay and TeamApt, and even smaller ones like CrowdForce, who at this time is saying that it has raised a $3.6 million pre-Series A funding.
Aruwa Capital Management led the equity-and-debt spherical, with participation from HAVAÍC and AAIC. The firm stated it’s going to use a part of the capital to increase its crew, geographical operations and advertising and marketing to increase its 7,000-strong energetic agent community three-fold this yr.
The firm was launched in 2015 by Oluwatomi Ayorinde and Damilola Ayorinde as CellularForms, an information assortment agent community. The idea was to seize and construct dependable offline knowledge (the place 90% of the nation’s financial actions reside) and supply insights on hard-to-reach rural and semi-urban areas for companies, NGOs and growth organizations.
In 2018, the corporate acquired its first huge break whereas engaged on DealerMoni, a small mortgage scheme for micro merchants pioneered by the Nigerian authorities. The thought was to give these merchants repayable loans to assist them with their companies and produce them out of the poverty line. However, the problem was that no database existed to execute this program.
So CellularForms, with its 20,000-strong brokers, carried out KYC on 4.5 million eligible merchants and registered them for the DealerMoni program. But one other problem was getting cash into the fingers of those merchants. Most of them had been unbanked, so sending cash to financial institution accounts wasn’t workable, and, for these with accounts, banks had been removed from their places.
The firm sensed a chance and determined to rebrand as CrowdForce, a monetary companies distribution community that may flip any service provider right into a cellular financial institution department.
“The idea was that if we could build this successfully well, several other fintechs can layer to deliver their services to the mass markets and that will still be in line with our objective of building our distribution,” stated CEO Oluwatomi Ayorinde. “When you look at most of the successful companies in Nigeria, they all had to build some sort of offline distribution.”
The YC-backed CrowdForce nonetheless runs its CellularForms merchandise. But it’s PayForce, its second product, that the corporate has positioned in the driving seat. PayForce is a POS-enabled system retailers — who double as brokers — use to present ATM companies, switch and invoice funds to shoppers in areas the place banks are historically absent and with excessive cash demand. For brokers, PayForce helps handle their cash float safely and permits them to earn additional earnings by performing as an agent.
But in some unspecified time in the future, these brokers’ liquidity is affected once they run out of cash. Liquidity can usually be an issue when it occurs as a result of there’s a bent to lose clients’ belief.
Typically, greater than 200,000 agents across Nigeria refinance their working capital by taking lengthy walks to the banks or the fintechs they work for like TeamApt. There are newer strategies, such because the one introduced on by one other YC-backed float-as-a-service startup Moni, the place brokers are supplied low-interest loans by means of a referral and vetting system.
But CrowdForce employs a distinct strategy. The firm strikes partnerships with bigger brick-and-mortar companies similar to gasoline stations and turns them into cellular financial institution branches that provide float companies whereas storing their cash on a PayForce digital pockets.
“These stations [gas stations] collect cash from their sales of petrol daily. But now, we can leverage that liquidity, turn them to mobile ATMs that can then provide liquidity either to customers or to other mini agency banking outlets,” stated the CEO. “So if you run an agent network and run out of cash, you don’t necessarily need only a bank branch. You can look for a gas station nearby and replenish cash flow.”
In addition to gasoline stations, CrowdForce distributes its POS terminals to different companies like pharmacies and reseller networks. The firm stated it has partnered with 19,000 gasoline stations, 20,0000 resellers and 6,000 pharmacies to broaden its distribution community. With this mannequin, CrowdForce claims to have the biggest liquidity amongst Nigerian agent banking networks, leveraging greater than ₦1.7 trillion through its companions.
The Nigerian company banking firm fees a 0.6% fee per transaction its companions make throughout all boards. CrowdForce says it has been cash constructive since 2020 whereas rising 25% month-on-month to serve 1.9 million distinctive clients in 25 Nigerian states to date.
Ayorinde stated CrowdForce will use the funding to distribute extra level of sale terminals to its companions in the subsequent 12 to 18 months as the corporate, in a press release, stated it goals to convey monetary companies inside one kilometer, or inside quarter-hour, of all Nigerians.
“We see significant value in the product [CrowdForce] as it is solving a real problem by providing access to critical financial services in rural areas that have been overlooked by traditional financial institutions,” stated Aruwa Capital founder and managing associate Adesuwa Okunbo Rhodes in a press release. “CrowdForce is actively deepening financial inclusion through its products and services, and has unique competitive advantages through its proprietary technology and extensive agent distribution network across the country.”