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Africa\u2019s top digital banking platforms typically come from high-growth, populous markets like Nigeria, South Africa, and Egypt. But Affinity Africa<\/a>, an upstart from Ghana, wants to join the conversation. The startup has raised $8 million in seed funding to expand its financial products further across the country, where mobile money is the dominant financial tool.<\/p>\n While mobile money has become the go-to for financial transactions, the traditional banking sector in Ghana and Africa as a whole remains highly profitable. Since the pandemic, banks in Ghana have recorded growth<\/a> with an after-tax return on equity<\/a> (RoE) that exceeds the global average.<\/p>\n However, these profits rely heavily on fees, while inefficiencies like high operational costs, extensive in-person paperwork, and long onboarding times have left millions underserved. <\/p>\n Today, less than 10% of businesses in Africa have access to credit, and over 60% of adults lack formal financial services, per World Bank data<\/a>. This growing gap has fueled demand for digital banking alternatives like Affinity, which offer a cheaper, more inclusive model.<\/p>\n Affinity has onboarded over 50,000 customers since its launch last October, its founder and CEO Tarek Mouganie<\/a> says. Notably, 65% of its users had never accessed formal banking products before, and over 60% are women working in the informal sector.<\/p>\n So why has it taken this long for a digital banking upstart to gain such traction in Ghana? The country\u2019s strict banking regulations play a big role. Unlike neighbouring Nigeria, where digital banks can easily operate with microfinance licenses<\/a>, such licenses are rare, expensive and take time to get in Ghana, making it difficult for fintechs to enter the space.<\/p>\n \u201cGhana\u2019s regulator is focused on protecting consumers, especially in deposit-taking institutions,\u201d Mouganie told TechCrunch. \u201cWe had to prove strong risk management, break even as a microfinance institution, and align our mission with the government\u2019s goal of banking the unbanked. What ultimately convinced them was how our digital platform reduces friction and lowers banking costs for individuals and micro, small and medium enterprises (MSMEs.)\u201d<\/p>\n Mouganie, who comes from a fourth-generation Ghanaian family of Lebanese descent, studied in the U.K., earning a bachelor\u2019s and a doctorate before launching his career in academia and finance. He later worked as a Director at Man Group, a $160 billion global investment fund. There, he worked on major IPOs, including Visa and Compartamos, Latin America\u2019s largest microfinance institution.<\/p>\n After returning to Ghana ten years ago, Mouganie looked to solve Africa\u2019s financial inclusion problem, a challenge often highlighted in global consulting reports.<\/p>\n \u201cNumbers like Africa\u2019s $331 billion credit gap are still being quoted today,\u201d he said. \u201cNothing has really changed. That made me obsessed with building a full-fledged retail bank for MSMEs, similar to what Santander, Lloyds, or Chase Bank offer in Europe and the U.S.\u2014but tailored for Africa\u2019s majority.\u201d<\/p>\n He and a group of friends and family raised $2 million to acquire a microfinance bank in 2020. They included funds from selling his London house, he claims. The entity, which received a savings and loans license, first of its kind granted in over 10 years, served as a testing ground for its current banking solutions.<\/p>\n By 2022, Affinity raised an additional $3 million in a pre-seed round to upgrade this license. Following months of stealth testing, the fintech officially launched its app last October after receiving approval from Bank of Ghana, the country\u2019s apex bank.<\/p>\n The Ghanaian fintech serves both individuals and micro-enterprises, which are often indistinguishable in Africa. Customers get free savings and current accounts with no transaction limits, and the platform immediately begins credit-scoring users based on their transaction history.<\/p>\n After a few months of usage, Affinity extends lines of credit with monthly interest rates of 3-7%. The Accra-based fintech has disbursed over $15 million in loans across various products, with instant loans growing 30% month-over-month and a non-performing loan (NPL) rate of 3%.<\/p>\n Customers can also access other banking services, including savings, payments, investments, and transfers to banks and mobile money wallets. Last month, 89% of deposit inflows, which have grown 54% month-over-month since its launch, came from mobile money top-ups, with the remaining 11% from bank transfers. <\/p>\n Loans account for over 90% of Affinity\u2019s revenue, with the remaining 10% coming from fees and commissions on services like utility bill and internet payments via USSD and the mobile app. Its revenue has increased 37% month-over-month over the last six months, according to Mouganie.<\/p>\nFrom investment banking to fintech disruptor<\/h3>\n
A hybrid approach: digital banking with a physical touch<\/h3>\n