Pan African Neobank Fin acquires SA Based Thuthukani Home Loans

Credit-led neobank Fin ( formerly Finclusion group) has acquired SA-based Thuthukani Housing Finance (Pty) Ltd. to complete its financing product offerings for its customers.

With this acquisition, Thuthukani’s incremental housing finance offering gets renamed to Fin Home  Loans and integrated into Fin’s South African portfolio. Fin Home Loans’ aim will remain to give middle to lower-income Fin customers access to affordable finance.

Early last year, Fin raised USD 20 M in debt and equity from marquis investors, with a major portion as debt from local currency funds in Eswatini and South Africa. In 2021, the neobank, in partnership with Lendable, reportedly raised USD 20 M in debt for enterprise development. During the same year, Fin acquired the South African payroll software firm HelloHR.

A close look at Fin’s portfolio suggests that the neobank is quite clear with its product offering and customer acquisition strategy. Since its launch in 2018, Fin has used lending as the approach to onboard users. So far, the neobank has covered quite a wide range of credit products and insurance. This latest addition of Fin home loans to its portfolio of products gives them an opportunity for big-ticket lending.

Interestingly, another credit-led African neobank, Fairmoney, acquired Payforce, a merchant payment platform, last week. In 2021, Fairmoney raised its Series B of USD 42 M, led by Tiger Global. The focus markets of the company are Nigeria and India, two heavily populated markets with sufficient requirements for credit.

Fin focuses on some very fast-moving credit markets in Africa, namely South Africa, Kenya and Tanzania. These markets are not new for credit or microfinance offerings. Companies like Branch, Tala and Safaricom’s Fluliza are quite active in microfinancing in East Africa. To be able to compete with other heavily funded products, Fin has carved out a sustainable strategy.

Co-CEO and Co-Founder of Fin Tonderai Mutesva said, “Our partnership focus sets Fin apart from other finance providers. We believe partnering with local suppliers, employers, and service providers is the most efficient way to engage with communities and offer our products to those needing them. By leaning on local knowledge, trust, and relationships, we can better and more easily serve customers and enhance our partners’ reputations while building our own.”

The said strategy reflects in their choice of product offerings. Fin’s portfolio consists of the following:

Fin Payroll Loans for employers for wage streaming and credit solutions to their employees,

Fin Online Loans credit for individuals with online applications,

Fin Medical Loans for financing the gap for procedures that are not covered by medical aid and financial help with medical aid shortfalls,

Fin Coverproviding cover for funerals, commuting, credit life and more, underwritten by GuardRisk,

Fin Pay – instant payments and credit at check-out,

The Fin Home Loans developmental housing product now complements this range of products in South Africa.

It has been made very clear by the African fintech startups in the past 2 years that credit and loans are the way to VC funding. Last year, for instance, credit and lending startups raised over USD 600 M in funding out of USD 1.6 B raised by fintechs in Africa.

Two factors that will make Fin a robust full-stack neobank are payment products and bigger markets. Compared to its peers, which are mostly Nigeria focussed companies, Fin seems to be missing the largest African market. However, it should be noted that Fin raised strategic funding last year from Cairo Angel Syndicate Fund, which can be the doorway to Africa’s other competitive fintech market – Egypt.

On the future plans of entering bigger markets, Mutesva said, “Fin is building a neobanking platform for Africa. As such, our long-term ambition is to serve all key markets across the continent. We are currently focused on our two regions of operations, Southern & Eastern Africa, where we are leading with our varied product offerings. We are open to geographic expansion in the near future, wherever opportunities present themselves.”

Likewise, to compete with other neobanks concerning product offerings, the company said, “Fin does have plans to roll out newer products in the coming time.”

In an exclusive byte to WT, Tonderai mentioned, “We have a product, Fin Pay, that we are rolling out in Q2 2023, which will essentially act like a credit card on top of mobile money or for online shopping. The product is designed to give interest-free credit for some time and allows people to gather rewards from their shopping experiences. This is the first of a diverse set of products we will be rolling out soon to provide a comprehensive neobanking experience for our customers.”