The Rise of Unified Financial Data Platforms in Africa

Following the introduction of M-Pesa’s mobile money system in 2007, the fintech landscape has experienced significant expansion, encompassing a wide array of services from digital wallets to lending platforms. This mobile money ecosystem is currently experiencing double-digit year-over-year growth, resulting in a substantial volume of data generation. However, this growth has also created fragmentation, with individual user information being dispersed and accessible through numerous different channels.

Challenges for Financial Institutions

Banks and financial institutions encounter difficulties in gaining a comprehensive understanding of user data and deriving meaningful insights from it. Over the last three years, several platforms have emerged aiming to address this issue. These platforms consolidate users’ financial data and make it available to financial institutions via APIs, fostering more data-driven insights and enhanced product offerings. Pngme is a prominent example of such a platform.

Pngme Secures $3 Million Seed Funding

Pngme, a unified financial data platform with a focus on Africa but based in the U.S., recently announced the completion of a $3 million seed funding round. The investment was spearheaded by Radical Ventures, Raptor Group, Lateral Capital, and EchoVC, and was finalized in the third quarter of 2020. This followed a $500,000 pre-seed raise two years prior. The funding reflects continued growth in the platform’s customer base, which includes banks, fintech companies, credit bureaus, and microfinance institutions in Ghana, Kenya, and Nigeria.

Founding and Early Days

Pngme was founded by Brendan Playford and Cate Rung. The company initially began in 2018 as a lending platform. Playford, having spent his formative years in the U.K., relocated to East Africa in 2007 to engage in philanthropic work. During this time, he provided short-term loans to entrepreneurs, particularly in Kenya and Tanzania, which ultimately laid the groundwork for the establishment of Pngme, with Playford serving as CEO and Rung as COO.

The Genesis of Pngme’s Vision

“The initial impetus stemmed from this experience, coupled with the realization of being credit invisible in the U.K., which led Cate and me to specifically focus on expanding financial access to Africans,” Playford explained in an interview with TechCrunch.

Shifting Focus to Data Infrastructure

According to Rung, the company’s original concept centered on providing greater support to entrepreneurs in terms of capital. However, as they entered 2019 and secured their pre-seed funding, the founders identified a more pressing challenge: the lack of robust data infrastructure for assessing risk when extending loans or capital.

A Pivotal Decision

Participation in an accelerator program in Toronto, Canada, helped them recognize the greater value proposition – either connecting entrepreneurs directly with finance (a B2C approach) or building the underlying data infrastructure to understand financial identity and risk.

Prioritizing Data Infrastructure

“We were essentially building two separate companies simultaneously, necessitating a focused approach. We determined that the data infrastructure layer was critical and represented a significant pain point across much of sub-Saharan Africa,” the COO elaborated.

The Pivot and its Impact

Pngme swiftly pivoted towards the latter. Developing this infrastructure was projected to have a more substantial impact. The ability to consolidate mobile money transactions, bank statements, loan data, and behavioral data into a structured format, and then provide access through an open API, would empower developers, fintechs, and banks with the data needed to drive real-time credit scoring and innovative financial products.

Understanding Consumer Needs

Furthermore, the company discovered that consumers also desire a better understanding of their own finances. This insight allows them to navigate towards financial wellness through credit access and, eventually, more sophisticated financial tools. Financial institutions, conversely, require this data to identify and expand into new customer segments and improve profitability. Therefore, prioritizing customer needs is a central tenet of Pngme’s value proposition.

A Consumer-Centric Approach

“We are intensely focused on delivering the most comprehensive real-time data coverage on credit-invisible customers, a capability currently unmatched by any other API in our target markets,” Playford stated, highlighting the company’s commitment to a consumer-centric strategy.

Pngme’s Growing Customer Base

Pngme’s current clientele includes SimpleFi, Pavelon, ReadyCash, CashTopUp, and Rigo Microfinance. The CEO also announced plans to integrate with major institutional banks in the coming month.

Differentiating from Competitors

Despite similarities to other API fintech startups in the region, offering functionalities akin to Plaid, Playford asserts that Pngme aims to distinguish itself from the billion-dollar company.

Focus on Traditional Channels and Machine Learning

One key differentiator is its emphasis on traditional channels, such as USSD data – which boasts the highest financial inclusion rate on the continent. “We’ve gone beyond simply providing the rails; we’re actively building on top of the data, offering machine learning insights to our customers,” Rung explained.

Streamlined Data Sharing

The platform’s SDK facilitates user-permissioned data collection through a partner’s existing app, utilizing a one-click data-sharing feature. This data is then delivered through an easily integrated API, providing real-time financial data and alerts. Pngme experienced 300% month-on-month growth in the fourth quarter of 2020 and anticipates reaching hundreds of thousands, and eventually millions, of user-permissioned data profiles by 2022.

Pngme’s Revenue Model

Pngme’s revenue model is based on subscription fees and API usage. A free tier provides developers with a limited number of free API calls without requiring a subscription. The enterprise tier, designed for banks and fintechs, charges for API calls, with potential discounts available. Additionally, the company offers a white-glove onboarding process, allowing developers and startups to collaborate on building specific use cases on the platform.

Scaling for Growth

Since securing its pre-seed funding, Pngme operated in stealth mode, collaborating with a select group of customers. With this new seed funding, the company is accelerating its growth plans. The investment will be used to expand its teams in Lagos and Nairobi, particularly focusing on engineers and data scientists, and to scale its product for banks, mobile money operators, and fintechs.

Investor Confidence

Lateral Capital, an investor in this round, also backs Mono, another API fintech startup. Rob Eloff, managing partner at Lateral Capital, stated to TechCrunch that “over the past five years, we have observed a growing recognition of the continent-wide challenge of providing accurate relational data for financial services customers across Africa. In Pngme, we are fortunate to have found a team with a unique solution to the root cause of financial exclusion in Africa, and a distinctive culture that blends the best of Africa and the U.S.”

EchoVC’s Perspective

EchoVC Partners, an early-stage VC with offices in Lagos, London, and Nairobi, highlighted the Pngme team’s success in developing and delivering a unified financial data API platform for credit identity and access, according to Damilola Thompson, VP and associate general counsel at the firm.

Looking Ahead

Currently, Pngme processes millions of data points each month. Rung believes this scale will facilitate the development of new technologies and more sophisticated financial products.

The Future of Financial Inclusion

“What I find most exciting is the way mobile money bypassed traditional financial infrastructure. Similarly, we’re witnessing open banking in the U.S. leading to a surge of new financial products for consumers. I hope that by providing forward-thinking open API layers, we can achieve the same outcome in Africa,” she concluded.