Meet the Entrepreneur: Cynthia Wandia, Kwara

At FINCA Ventures, we look for entrepreneurs leveraging market-based solutions to create large-scale, lasting social impact. In this series, “Meet the Entrepreneur,” we’ll be taking you into the minds of the intrepid leaders at our portfolio companies who boldly venture into markets in need of positive disruption.

Member-owned credit unions provide responsible financial services to nearly 400 million individuals worldwide. However, credit unions in emerging markets that are looking to modernize have been left behind. Most rely on high-touch management systems, with informal operations and manual record-keeping that can result in inefficient operations, unreliable data, and frequent occurrences of fraud. Alternative core banking software is often unsuited to local credit unions’ unique needs with expensive and rigid solutions. Despite a previous lack of competition at the last mile, digital-first lenders are now posing an increasing threat. While offering a cutting-edge and alluring user interface, new market entrants frequently charge much higher rates for credit products and give lower interest rates on savings. In this interview, we spoke with Cynthia Wandia, co-founder of Kwara, to learn more about how the company is poised to create systemic change throughout the credit union ecosystem.

What was the career path that led you to co-found Kwara?

Cynthia: I have an engineering background and I’ve always loved to solve problems and build things. I started first focusing on corporate opportunities during school and had the chance to work in consumer products at Johnson and Johnson and Ikea. After graduating, I was inclined to see whether there was an opportunity to intersect social work with business, which led me to work and volunteer in China, Mexico, and rural Canada. Remaining in the corporate workforce, I had the chance to work in the energy sector in Germany. Even while I had some pretty exciting opportunities—from trading to fixing wind turbines—I soon realized that the real opportunity was in my ability to identify a problem and find a solution—ideally one that involves amazing people and a great product.

About that time, my previous employer started a corporate venture capital program, which allowed me to create my first startup where I gained a lot of knowledge about introducing a product to several markets and I believe that prepared me well for the following opportunity, which was Kwara.

Where did the idea of Kwara come from?

Cynthia: Analyzing the supply chain for coffee farmers led to the creation of Kwara. I joined a venture studio based in Berlin, where they were looking for entrepreneurs to launch a few different ventures. One that stood out to me was how to make it simpler for coffee farmers to obtain a larger share of the value of the coffee that they put so much effort into producing. My grandmother was a Kenyan coffee farmer, so I clung to this idea and chose to look further into it since I enjoy coffee.

As I delved deeper into my research, engaging in conversations with farmers and various stakeholders throughout the supply chain, a recurring theme emerged – the pivotal role of the credit union. In Kenya, these are commonly referred to as SACCOs, an acronym for Savings and Credit Co-operatives. This revelation cemented my belief that SACCOs stood as the farmer’s foremost guardians, not only facilitating market access but also offering financial support across various facets of their lives. Whether it’s school fees, financing, hospital bills, investments in more of their crop, housing, insurance, and so on.

As I researched deeper, I came across this cooperative financial institution that appeared to function effectively in terms of providing top-notch financial services to the clients it serviced. It was regionalized and tailored to the requirements of various groups, extending beyond just farmers. It appeared that any group of people could unite and produce a capital source that would meet their demands and meet those needs effectively however they struggled to meet such needs at scale or digitally. A digital platform that could serve as the foundation for them to execute their services more quickly, more affordably, and at scale struck me as being particularly well suited to their similarity in mission and execution across the board.

What were they lacking that you noticed right away?

Cynthia: Typically, a customer would spend most of their day traveling to a credit union with a limited understanding of their balances or how much they could borrow. Not to mention, having to travel all that way only to get assistance with their financial situation. While helpful, if you’re a farmer or market trader, that’s a day gone. The ability to access the services, their quality of delivery, and their differentiation and personalization led to the realization that there was a chance to assist the credit union in continuing to offer these services while doing so better, quicker, and to a wider customer base.

COVID-19 had an impact on how financial institutions think about digitization and engaging with their customers. How did this enhance Kwara’s value proposition and trajectory?

Cynthia: We launched and attracted our first customers before COVID-19. We were working to earn people’s trust, deliver excellent services, and establish our brand. However, as an outbound sales-oriented company, the onset of COVID caused a significant setback at first because of the restriction on movement. Relationship building was what we did, but suddenly, we were unable to accomplish it. Pivoting, we stayed in touch with our prospects, called each one individually, and reassured them that we were still available to them despite the uncertainties brought on by the pandemic. We discovered that several of the organizations on our prospect list had no way to service their members.

As a result, we designed a product to accommodate SACCOS directly affected at that time. We offered a free trial of the platform and as COVID restrictions were eased, we noticed positive alignment and acceptance towards digitalization. COVID acted as the chief digitalization officer for most of these institutions. Even the way we talked to leads and prospects altered. The question wasn’t, “Do you understand digitization and are you open to it?” but rather, “How quickly can we make sure that if this happens again, you will be ready to continue serving your members?”

What role does Kwara see itself playing in increasing financial inclusion on the continent?

Cynthia: We are very optimistic about the advantages of being in a SACCO for individuals. Due to some implicit and inherent mechanisms of a SACCO, we think it’s the quickest path to financial wellness. As a starting point, saving is encouraged—almost required—regardless of how little you save. It’s more important to develop a ‘save first, spend later’ habit. The idea of access to credit is a factor that depends on how much you’ve saved and whether someone can vouch for you. The inherent mechanisms of a SACCO drive people faster towards building an asset base, building real wealth, and surviving financial shocks.

The small role we believe Kwara can play is to make being part of a SACCO seamless, secure, and safe. And we are doing that in two ways. First is by helping SACCOS elevate their infrastructure so that they’re investible, secure, and meet compliance standards. Secondly, is to make it easy for a potential member to join. Allowing them the option of joining individually or with their friends, making it simple to obtain financial literacy, credit access, and the means to repay it, as well as broadening how your investments or spending can be in line with your long-term goals.

Imagine it’s five years from now and Kwara is making international headlines. What would that headline be and why is this important to you?

Cynthia: Something along the lines of “Kwara Draws 50 Million People Into Credit Union Banking” would be my dream headline. We would be thrilled to learn that we had been successful in driving 50 million people to think about joining or beginning their savings journey with a credit union. Being a part of a SACCO makes individuals feel more empowered. You’re not getting handouts, instead, you’re a part of an economic engine and one that helps you and those in your community grow.

What are some of the barriers Kwara faces in achieving the vision in that headline?

Cynthia: Because technology advances so quickly, innovation- or technology-driven change is always challenging. What used to take ten years to alter today takes only a few months. People who have been doing things a certain way for a while may find that rate of change unsettling. However, there is a demographic dividend, particularly in emerging markets. There is a group of younger adults who have experienced rapid change as children. There is therefore comfort in that. As a result, I believe that some of these obstacles will be outweighed by certain advantages. Additionally, there will be a knowledge transfer across generations in which people will educate their parents and grandparents.

Why were you excited to have FINCA Ventures as one of your investors?

Cynthia: FINCA Ventures stood out for several reasons, but I can attest in particular to their profound level of understanding of financial services and the supply of financial services in markets that are currently underserved. For a customer who is low margin and possibly would not be very valuable otherwise, but has a right to the same services, there needs to be a natural understanding of the nature of the infrastructure, or lack thereof, constraints, and the creativity that needs to come together. Second is the expertise in emerging markets. We’re embracing opportunities around enhancing the credit experience for someone in a credit union, and who better to partner with than FINCA? Lastly, but certainly not least, is the relationship that we forged during the investment process with the team.

Everything we imagined back then has materialized in terms of partnership, the ability to discuss and discover new solutions together, availability, and willingness to help and connect and that’s why we’re thrilled to have them on board.