Nigeria financial sector has experienced a significant digital transformation over the past two decades, with the rise of digital banking and mobile money solutions tackling the inaccessibility of formal banking services in remote areas of the country.
More Nigerians are now financially included in the past three years, thanks to the emergence of the agency banking model, which has deepened access to financial services in a largely poor mass market.
However, there is still a significant disparity in financial service accessibility for the unbanked in underserved communities, even at this progress.
CrowdForce, one of the agency banking firms tackling the problem in Africa’s most populous country, today announced a $3.6 million pre-Series A investment, of which $1 million is debt. The round was led by Aruwa Capital Management, which also included HAVAC and AAIC.
About CrowdForce – Africa’s largest offline distribution network
CrowdForce was founded in 2015 originally as MobileForms, a data collection agent network, by CEO Oluwatomi Ayorinde and COO Damilola Ayorinde. The idea was to collect and generate reliable offline data (which accounts for 90% of the country’s economic activity) and deliver insights into hard-to-reach rural and semi-urban areas for enterprises, NGOs, and development groups.
In 2018, the Y-Combinator-backed company got its first big break while working on TraderMoni, a small loan scheme for micro traders pioneered by the Nigerian government. The idea was to give these traders repayable loans to help them with their businesses and bring them out of poverty. However, the problem was that no existing database to execute this idea.
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As a result, MobileForms performed KYC on 4.5 million qualified traders and registered them for the TraderMoni program with the help of its 20,000 agents network. But getting money into the hands of these traders was also a hurdle. Because most of them were unbanked, sending money to bank accounts was impossible, and for those who did have accounts, banks were located far from their homes.
Sensing an ample opportunity, MobileForms shifted its focus to financial services in 2019 and rebranded as CrowdForce, a technology-driven agent distribution network that can transform any merchant into a mobile bank branch.
CEO Oluwatomi Ayorinde cited that — “When you look at most of the successful companies in Nigeria, they all had to build some offline distribution. We thought that if we could build this successfully well, several other fintech can layer to deliver their services to the mass markets, and that will still be in line with our objective of building our distribution.”
CrowdForce still runs its MobileForms products, mainly PayForce — its second product that is placed in the driving seat. PayForce is a POS-enabled system merchant — who double as agents — used to provide ATM services, transfer, and bill payments to consumers in areas where banks are traditionally absent and with high cash demand. For agents, PayForce helps manage their cash float safely and allows them to earn extra income by acting as an agent.
Increasing Financial Accessibility for the Unbanked and Underserved with Agency Banking
According to the World Bank, Nigeria had 4.3 bank branches and 19 ATMs per 100,000 people in 2018, compared to the world average of 13 bank branches and 40 ATMs. Reports also say that less than one-third of Nigerian adults have access to a bank branch or ATM within one kilometre of their lives, thereby leaving many of its 200 million population either unbanked or underserved.
This challenge in accessing financial services has given rise to agency banking. This branchless banking model extends financial assistance to the last mile via a network of agents. It’s a thriving business for banks, larger fintech such as OPay, Paga, and TeamApt, and now CrowdForce.
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As it looks, the majority of the low-hanging fruit of the agency banking market has been captured, which is serving the already banked people at the last mile in urban areas. This is where CrowdForce is leveraging agents networks to serve underserved communities.
The company currently has about 7,000 active agents, a small number when compared to companies like E-Settlement, Paga, or Opay, which each have an average of 100,000 agents. CrowdForce, on the other hand, relies on partnerships with cash-heavy small businesses to expand its distribution network, converting them into mobile bank branches while assisting them in storing their cash in its PayForce digital wallets.
According to an official release, the company has partnered with 19,000 gas stations, 20,000 merchants, and 6,000 pharmacies in the last three years. CrowdForce claims to have the most liquidity among Nigerian agent banking networks, with over $4 billion (1.7 trillion) in assets under management through its partners. It also claims to have been cash positive since 2020 and have serviced 25 Nigerian states with 1.9M unique customers — with the bulk in the north and month-on-month 25% user growth.
Talking of the $3.6 million investment raised, the company plans to grow its employees base, expand operations in the current market, boost marketing efforts, and triple its agent network this year. CrowdForce also intends to deliver more POS machines to small companies, such as petrol stations, pharmacies, and aggregators, which will serve as mobile bank branches, to bring financial services to all Nigerians within one kilometre, or 15 minutes.
CrowdForce, like MobileForms, continues to assist businesses and government agencies in gaining access to market data. Every transaction made through the PayForce platform earns the firm a commission, and it also charges for access to its market data.
Investors have shown interest in its innovative business approach. The startup had previously raised $500,000 from angel and venture capital investors such as 500 Startups, Ventures Platform, and Right Side Capital after the co-founders’ savings were used to bootstrap the company early on.
Aruwa Capital founder and managing partner Adesuwa Okunbo Rhodes said in a statement — “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. We see significant value in the product as it is solving a real problem by providing access to critical financial services in rural areas that traditional financial institutions have overlooked.”
