We are building a digital-only bank in Africa, bringing financial inclusion to millions.
- Essex, United Kingdom
Categories: Finance & Payments Digital B2C
Born from Ignite Accelerator as an e-commerce platform for farmers, Zazu has now pivoted to become a 21st century bank for Africa, launching imminently to a waiting list of users. Zambia has 16.6 Million people, with 1.2 Million adults in formal employment, 1.4 Million MSME’s & 2 Million emerging farmers. We believe these high earners may be unhappy with the high cost of banking.
Zazu is developing a prepaid card with a companion app to offer a real-time log of a consumer’s spending & control on the card’s usage.
We believe our proposition is affordable branchless banking for Africa, via a banking app through offering unprecedented customer service. It costs $2 to obtain a card, with a monthly subscription of $2. We are aiming to issue 100,000 accounts in Zambia before December 2018. We are currently in talks with a potential sponsor bank, with whom we hope that we would be able to expand to other African countries.
In October 2015, Zazu started out as a digital marketplace connecting African farmers to local markets. The lack of bank accounts meant that payments to farmers were problematic and inefficient. Seeing a problem worth tackling, the founders spent time looking at how banking could be made more accessible. We are working to make sure every adult can have a bank account in a hassle free manner.
Zazu is working to make banking in Africa transparent, accessible and affordable. We want to get more people banking.
Substantial accomplishments to date
• Jan-April 2016: Participated in Ignite Accelerator in London as an e-commerce platform for farmers and retailers in emerging markets.
• July 2016: Closed a seed round (as Zazu e-commerce) from notable investors who have founded and work at Episode 1 Ventures, PlayFair Capital, Six Sigma Systems and Moelis & Company.
• October 2016: Recruited our CTO, previously at Lloyds Banking Group who immediately began working on developing Zazu’s core banking platform, entirely in house.
• January 2017: Started partnership negotiations with a potential sponsor bank.
• June 2017: Obtained a signed letter of intent from a potential sponsor bank.
• July 2017: Our invitation-only waiting list is now oversubscribed for our expected November launch.
• November 2017: We plan to launch our Alpha roll out for a controlled pilot consisting of 1500 individuals.
We believe there are 4 main sources of potential revenue for Zazu:
Account opening fees: We plan to charge $2 to open an account.
Subscription fees: We plan to charge a monthly fee of $2 to maintain the account.
We think customers’ data is incredibly powerful and we intend to earn affiliate revenues for referring customers to appropriate financial services (e.g. lending, insurance, etc.). We anticipate implementing this in Q2 2018, once we have issued and signed contracts with partners.
Overdraft fees. We intend to acquire a banking licence, which requires an organisation to have $5 million in capital, after which we expect to be able to earn revenue from overdraft fees. Acquiring a banking licence will be dependent on raising significant further capital.
Use of proceeds
We have assembled a winning team and are developing an exciting product. We want to establish Zazu as a trusted brand for affordable and transparent financial services.
We expect that this investment will allow us to ship to ALPHA users and deliver the product to them. It should also provide sufficient capital to take us through to 2018, where we intend to raise a substantial Series A for nationwide launch.
The proceeds from this raise will:
Ensure we can hire engineers to continue work on the product (iOs, Android and Services Engineer).
Allow us to bring on to the team an experienced marketing manager and local CFO.
Establish our sales team to take advantage of new customer acquisition channels.
Existing investors should note that, due to its change in direction of the business, the company may no longer be eligible for SEIS or EIS tax relief. The company has applied for Advanced Assurance from HMRC, however, given the focus of the new business activities, there is significant doubt as to whether it will be granted. Therefore, no tax eligibility is being offered as part of this fundraising round and any SEIS/EIS tax relief claimed by existing investors will likely be lost. Tax treatment is always dependent on individual circumstances and subject to change.
The number of unbanked adults in Sub-Saharan Africa is 350 million, and in Zambia, only 24.8% of adults have or use commercial banks. The target Zazu customer is affluent, educated, financially literate and uses technology products, aged generally 25-44. Our experience suggests these customers are unhappy with visiting branch networks or paying to access banking. We are targeting this group because we believe they want to stay on top of their money and outgoings.
In 2015, the number of smartphones in Africa reached 226 million, and this number is expected to rise to 720 million people by 2020. As such, Zazu is developing a digital bank to simplify everyday banking for everyday people.
Our aim is to deliver integral financial services to an increasingly growing (size and sophistication) base. In order to capitalise on this growth, we are building Zazu to provide the payment ‘rails’ on which a broad range of financial services can be delivered cheaply and conveniently to all. We see comparables as DfID funded MPesa who continue to be the poster child for mobile money around the world. Similarly, Monzo in Europe have demonstrated that a well developed challenger bank with customer centricity at its heart can succeed.
Characteristics of target market
The value of mobile money transactions in Sub Saharan Africa surged to $656m in 2014 and could more than double to $1.3bn by 2019. As more people from Sub Saharan Africa come online, they will be looking for new ways to move money, bank, and access financial services. Zazu predicts that as mobile phones increase in popularity, establishing the framework for sophisticated financial services now will pay off handsomely.
Banks by nature have products targeting a very large segment, albeit a few products and services can be niche targeting. In wanting to provide a bank account, Zazu is targeting young professionals who:
- Yearn for better control of their financial health.
- Want easier and improved access to financial management services.
- Are keen for a change and to move away from traditional banks.
- Who use their phones for everything, news, browsing etc.
Zazu seeks to develop a community and as such, in order to cultivate trust and brand loyalty, we are focusing on early adopters from universities, tech hubs, expats, communities, multinational corporations. Zazu intends to work with these users and develop them into rich organic brand evangelists. Just like Facebook has grown because of unsolicited discussions or referrals, we want to weave Zazu into the fabric of culture so that our customers can’t help but tell their friends and family about Zazu.
We believe that as an early mover to digital banking in Africa, customers will initially try our product out of curiosity and will stay for our customer centricity and simplified proposition. In addition, we have been featured (as Zazu e-commerce) on Bloomberg and Financial Times ‘This is Africa’ portal.
Social: Early ALPHA users are people who have signed up on our waiting list. As we only have 1500 cards and accounts to give away, these early users have to refer friends if they want to secure their account.
Paid Marketing: we see targeted digital advertising as having been crucial to acquiring early adopters. This will continue to be our main mode of acquiring users.
Focus Groups: Developing a strong brand that speaks to the user is something we pride ourselves in. As such, we intend to regularly hold focus groups to understand what we can be doing better than the competition and how the product can be perfected.
Going forward, we intend to recruit a Marketing Manager to take full ownership of this.
As an early mover into digital banking within Sub Saharan Africa, we have competitors operating in financial services such as traditional banks, micro financing institutions and saving groups. We believe our major competitive strategies lie in:
- Early Mover Advantage: We believe we are an early digital bank in Africa, meaning that we are building an innovative and iterative product design to secure what we believe to be the most important client base before competitors appear.
- Technology centric: our research suggests that many banks and challenger banks rely on outsourced developers. Zazu has developed the product entirely in house.
- Customer experience. We aim to provide a customer experience and user interface recognised by our customers as market leading. This will support our objective of Zazu eventually becoming the financial control centre of our target market.
- Ethical finance: We believe this will resonate with a growing user base who have been let down by other financial services companies. By making banking transparent, human and fun again, we hope to make more people informed consumers of financial services.
- Team: Zazu’s founders have worked at the UN, Lloyds Bank and London School of Economics. We have experience in international development, finance and technology. We believe these core varied skills help us understand, develop and communicate a stronger proposition to our customers.
This powerful combination of innovation, obsessing over customers and ethical finance, means Zazu can become a respectable and trusted brand.