Nigerians have reacted to the loss of 6 billion naira recorded in 2021 by Kuda Microfinance Bank, which was more than 7 times the N868 million loss reported in 2020.
Many have criticized the firm for its “bank for free» customer acquisition strategy, which takes place without transfer fees within the bank. The strategy also means 25 free transfers to other banks each month with an additional free transfers to other banks costing N10 each.
To enable the bank to increase its revenue and move towards profitability, there are many suggestions for modifying its strategy.
What they say
@Afolabij1 said, “On Kuda Financial Status (FY21), the bank is making 3 billion in revenue while recording a loss of 6 billion (Naira). High expenses, high defaults on overdrafts and expensive marketing, among others, contributed to this performance. The bank will have to cut costs, correct its overdraft rate and further increase its income as it looks to be profitable in the future.
On Kuda’s financial situation (FY21), the bank is making 3 billion in revenue while registering losses of 6 billion (Naira). High expenses, high defaults on overdrafts and expensive marketing, among others, contributed to this performance.
— Oluwajuwonlo Afolabi (@Afolabij1) September 17, 2022
@ErnieFemiOwen said, “This Kuda Bank madness just validates my point! Product managers with banking experience are essential to any startup. We see beyond the product set up. Why in God’s green earth am I going to allow transfers I’d rather improve your transfer experience than reduce costs.”
This madness of the Kuda bank only validates my point!
Product managers with banking experience are essential to any startup. We see beyond product configuration
Why in God’s green earth will I allow free transfers. I’d rather improve your transfer experience than reduce costs.— Ernie (@ErnieFemiOwen) September 16, 2022
@IAtalkspace noted, “It’s always been fairly fair to say that Kuda Bank would lose money in the short term for 3 reasons: first, it competes on price while spending a lot on brand awareness/marketing; second, its debit card failure rate is high, customers say; three, relatively slow to full deployment”
It has always been fairly fair to say that Kuda Bank would lose money in the short term for 3 reasons:
1. It competed on price while spending heavily on brand awareness/marketing;
2. Its debit card failure rate is high, customers say.
3. Relatively slow to full deployment… https://t.co/GkVdELbaZy— Abubakar (@IAtalkspace) September 16, 2022
@Carnage4Life said, “Kuda, a Nigerian neo-bank, lost ₦6,092,554,866 ($14,214,681) in 2021. Much of this was due to bad loans as their default rate was 69% compared to 4.8% for traditional banks. Cheap credit is a great growth tactic, but a horrible business model.
Kuda, a Nigerian neo-bank, lost ₦6,092,554,866 ($14,214,681) in 2021. Much of this was due to bad loans, as their default rate was 69% compared to 4.8% for traditional banks.
Cheap credit is a great growth tactic, but a horrible business model. https://t.co/r3iHwWWjfA
— Dare Obasanjo (@Carnage4Life) September 17, 2022
@Titoipinmoye wrote, “At the end of the day, Kuda is not a commercial bank. My question is what problem are they really solving?”
Ultimately… Kuda is not a commercial bank.
My question is what problem do they really solve???
— Tito Ipinmoye, Dt.P. (@Titoipinmoye) September 17, 2022
What you should know
- Kuda Bank reported revenue of N3.2 billion in 2021, compared to N72.6 million reported during the same period in 2020.
- The 44-fold increase in revenue in just one year is the result of the aggressive growth and market penetration the bank deployed during the year as it focused on growing its loan portfolio.
- In July, the bank in a letter to customers said it will start charging N50 on all deposits of N10,000 or more made to customers’ Kuda accounts in accordance with the Federal Stamp Duty Act.
- It said the development would be applicable to deposits on wire transfers, money added to accounts with a debit card, as well as cash deposits made into an account at one of its partner banks.
- Meanwhile, he pointed out that he earns nothing from the N50 fee as everything would be put back into the government’s pocket.
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