Jumo raises $120 million to power fintech services across Africa

The South Africa- and UK-based fintech will use the funding, led by Fidelity, to expand to Nigeria and Cameroon and add more financial products.

Who is Jumo? Launched in 2015, it’s a

banking as a service

 (BaaS) provider that powers the infrastructure for banks and fintechs to offer lending and savings products. It’s currently present in six African markets, where it uses AI to build credit scores and extend loans to borrowers even if they don’t have a formal financial identity, collateral, or a credit record.

What’s its appeal? Jumo is positioning itself as the pipeline to help players tap the vast underbanked market with fintech solutions.

Seventy percent of credit applications are rejected by Africa-based lenders due to the lack of credit score data on applications.

But Jumo, with its AI capabilities, is helping to address this challenge. It has so far distributed $3.5 billion to more than 18 million customers.

The BaaS provider also has operating costs of $1 per customer, which, combined with the mega-round, should help it quickly scale its solution across the region and support more market players to reach more underbanked customers.

The big takeaway: This marks Fidelity’s first investment in Africa, underscoring the US appetite to extend capital to the fast-growing fintech ecosystem.

Fintechs operating in this region are more transformative than in developed countries because they allow consumers to transition straight from being underbanked to receiving AI-based and tailored digital access to financial services.

The development of internet infrastructure and the growing number of mobile device users is priming the region for fintech growth over the coming decade. For example, 94% of school fees in the Ivory Coast are already paid via mobile money.

This expanding adoption will increase the value of infrastructure providers like Jumo that power this ecosystem in the eyes of US investors. We’ve already observed this trend through the host of Africa-based open banking providers that have raised funding this year.

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