Nigeria has an average of 4.8 bank branches and 19 ATMs per 100,000 adults, compared to the global average of 13 bank branches and 40 ATMs† Reports also say that less than a third of Nigerian adults have access to a bank branch or ATM within a kilometer of where they live†
This challenge in accessing financial services, especially for those without and under a bank, has led to agency banking. This industry-less banking model extends financial services to the last mile through a network of agents. It’s a thriving business for banks, bigger fintechs like OPay and TeamApt, and even smaller ones like Abuja-based CrowdForce, which today announced it has raised a $3.6 million pre-Series A investment.
Aruwa Capital Management led the equity-and-debt round, with the participation of HAVAÍC and AAIC† The company said it will use some of the capital to expand its team, geographic operations and marketing to triple its 7,000-strong active agent network this year.
Company was launched in 2015 by Oluwatomi Ayorinde and Damilola Ayorinde as MobileForms, a network of data collection agents. The concept was to capture and build reliable offline data (where 90% of the country’s economic activity) live) and provide insight into hard-to-reach rural and semi-urban areas for companies, NGOs and development organizations.
In 2018, the company got its first major breakthrough while working on TraderMoni, a small loan scheme for micro traders developed by the Nigerian government. The idea was to give these merchants repayable loans to help them with their business and lift them out of the poverty line.† Howeverthe challenge was that no database existed to run this program.
So MobileForms, with its 20,000 strong agents, performed KYC on 4.5 million eligible merchants and registered them for the TraderMoni program. But another challenge was getting money into the hands of these traders. Most of them did not have a bank account so sending money to bank accounts was not workable, and for those with accounts, banks were far from their locations†
The company saw an opportunity and decided to rebrand into CrowdForce, a financial services distribution network that can turn any merchant into a mobile bank branch.
“The idea was that if we could build this successfully Well, several other fintechs can layer to deliver their services to the mass markets and that will still align with our objectively of building our distribution,” said CEO Oluwatomi Ayorinde. †If you look at most successful companies in Nigeria, they all had to build some kind of offline distribution†
The YC supported CrowdForce is still running its MobileForms products. But it is PayForce, the second product, that has put the company at the helm. PayForce is a POS system vendors — who also act as agents — use ATMs to issue ATMs, transfer payments, and bill consumers in areas where banks are located. traditional absent and with a high demand for cash. For agents, PayForce helps manage their cash float safe and allows them to earn extra income by acting as an agent†
But at some point, the liquidity of these agents is is being influenced when they run out of money. Liquidity can often be an issue when it happens because there is a tendency to lose customer trust†
Typical, more than 200,000 agents across Nigeria are refinancing their working capital by taking long walks to the banks or the fintechs they work for, such as TeamApt. There are newer methods, such as that of another YC-backed float-as-a-service startup Moni, where agents to be offered low interest loans through a referral and vetting system.
But CrowdForce takes a different approach. The company is partnering with larger brick-and-mortar companies such as gas stations and turning them into mobile bank branches that offer floating services while storing their funds in a PayForce digital wallet.
“These stations [gas stations] collect money daily from their petrol sales. But now we can leverage that liquidity, turn it into mobile ATMs that can then provide liquidity to customers or other mini-banking branches,” said the CEO. “So if you run a network of agents and run out of money, you don’t have to” necessary only need a bank branch. You can find a gas station near you and top up the cash flow†
In addition to to gas stations, CrowdForce distributes its POS terminals to other companies such as pharmacies and reseller networks. The company said it is working with 19,000 gas stations, 20,000 resellers and 6,000 pharmacies to expand its distribution network.† With this model, CrowdForce claims to have the largest liquidity of the Nigerian agent banking networks, leveraging more than ₦1.7 trillion through its partners.
The Nigerian banking business charges a 0.6% commission per transaction that its partners do across all board† CrowdForce says it has been cash positive since 2020, growing 25% monthly to serve 1.9 million unique customers in 25 Nigerian states so far.
Ayorinde said CrowdForce will use the funding to distribute more point-of-sale terminals to its partners in the next 12 to 18 months as the company said in a statement it aims to provide financial services within a kilometer or 15 minutes of all Nigerians.
“We see significant value in the product [CrowdForce] because it solves a real problem by providing access to critical financial services in rural areas that overlooked by traditional financial institutions,” said Aruwa Capital founder and managing partner Adesuwa Okunbo Rhodes in a statement. “Crowd Force is” active deepening financial inclusion through its products and services, and has unique competitive advantages through its proprietary technology and extensive distribution network for agents across the country.”