Key questions this article answers:
The State Bank of Pakistan’s announcement of Kuda securing a digital banking licence no-objection certificate under the KT bank entity was unexpected. Why is the Pakistani market attractive to a digital bank like Kuda?
What are the potential challenges Kuda will face in acquiring users in Pakistan, and how can it solve these?
You don’t see purple in many company brands; only a handful of companies dare to use this bold colour. But it seems to be catching on with digital banks—Nubank from Brazil, Starling in the UK and Nigeria’s very own Kuda bank.
Kuda’s brand colour is not the only thing that has caught people’s attention. Free transfers, loans at the click of a button and a $55 million Series B have all contributed to its popularity. Now, we can add to this list the recent news of its expansion to Pakistan.
In January, the State Bank of Pakistan (SBP) announced that it had granted No Objection Certificates (NOC) to five out of 20 applicants. The NOC is the first step—out of five—to receiving a digital banking license in line with the SBP’s Licensing and Regulatory Framework for digital banks in Pakistan.
One of the five recipients is KT Bank, a joint venture between Kuda Technologies (which is reportedly a registered entity of Kuda Bank) and two Pakistani companies—Fatima Fertilizer Company and City Schools Group. This, in many ways, was an unprecedented move, considering Kuda’s stated mission at launch was to build a “bank Africans will love”, starting with Nigeria.
With this, Kuda essentially bucked the pan-African expansion trend of Nigerian startups, choosing a less familiar country for African startups—Pakistan. I should state here, though, that Kuda has not acknowledged this move on its official channels, as it did with its launch in the United Kingdom, and a representative also told Stears that they are not ready to comment on this. But it is still intriguing to understand why Pakistan might be an attractive market for digital banks and whether Kuda, through KT bank, can grow its user base in the country.