TheCable

Tunde Kehinde, a graduate of Harvard Business School, is all set to float Lidya, Nigeria’s first online-only bank, in October 2016.

The bank, which is being branded as Nigeria’s first digital bank, will have no branches, but will be based in Nigeria’s commercial capital, Lagos.

According to Kehinde, who spoke to Bloomberg, Lidya will offer small and medium-sized businesses unsecured loans of between N152,000 ($500) and N4.5 million ($15,000).

“There are no real products catered to these customers today,” Kehinde told Bloomberg, adding that he will announce the formation of Lidya at a financial technology conference in New York.

“What we’re trying to do is introduce a lot of technology, algorithms and machine learning to industrialize the credit assessment process.”

The former managing director of Jumia, popularly regarded as Nigeria’s biggest online mall, also runs Africa Courier Express, a logistics company, along with Ercin Eksin, the other founder of Lidya.

Kehinde and Eksin are majority shareholders, but they hope to bring in other shareholders and raise more than $1 million in the next few months from investors, primarily in the US.

It will partner with other Nigerian banks to allow them to use it as a platform to target small businesses.

The online bank is looking to operate at a lower cost and offer financial services at such low cost to its customers.

“Because of how the banks are set up, with bricks and mortar networks, they’re more inclined to service multinationals and large government institutions,” Kehinde said.

“Their cost structure isn’t favourable to servicing small businesses. Because we’re using technology and algorithms to assess the risk, it allows them to offer financial products to these customers at a low cost.”