Kuda Microfinance Bank is preparing to expand its physical presence across Nigeria after receiving approval from the Central Bank of Nigeria (CBN) to operate as a National Microfinance Bank (MFB), a regulatory upgrade that comes with expectations of nationwide customer access and in-person support.
The new licence removes the geographic limitations attached to Kuda’s former unit microfinance bank status, which restricted physical operations to a single location despite the bank’s fully digital services. With national coverage now permitted, Kuda says it plans to roll out more experience centres to support customer service, complaint resolution, and community engagement, while maintaining digital banking as its core operating model.
“Securing a national microfinance banking licence is an important step for us as a regulated institution,” said Musty Mustapha, Managing Director and CEO of Kuda MFB, in a statement.
From digital-only to hybrid presence
Kuda’s move reflects a broader shift by the CBN to align licensing frameworks with the real operational scale of fast-growing fintechs. As digital banks attract millions of users nationwide, regulators have increasingly pushed for physical touchpoints that allow customers—particularly those in the informal sector—to resolve issues offline when necessary.
The trade-off, however, is cost. National licences pull fintechs closer to the operating realities of traditional banks, introducing expenses related to branches, staffing, and heavier compliance requirements. This shift tests the low-overhead advantage that has historically defined digital-first banking in Nigeria.
On January 26, 2025, the CBN announced it had upgraded the microfinance bank licences of several major fintechs, including Kuda, Moniepoint, and OPay, to national status. According to the apex bank, the decision was driven by the scale of these institutions’ operations and the need to ensure customers can access physical offices across the country.
Regulatory expectations and capital requirements
Although the CBN’s guidelines do not explicitly outline a direct upgrade path from unit MFB to national MFB, they do set expectations for physical expansion. State MFBs seeking national status, for instance, are required to operate at least five branches, reinforcing Kuda’s plan to establish multiple offices nationwide in the coming months.
The new licence also places Kuda under stricter regulatory and disclosure obligations. National MFBs are required to publish their audited annual accounts in a national daily newspaper, increasing transparency and public accountability.
Capital requirements rise sharply as well. While unit microfinance banks are required to maintain a minimum paid-up capital of ₦200 million ($142,808), national microfinance banks must hold at least ₦5 billion ($3.57 million). Kuda appears well positioned to meet this threshold, having raised $20 million in 2024 at a reported valuation of $500 million.
Strong transaction growth amid expansion plans
Despite the move toward physical expansion, Kuda says it will continue to prioritise digital banking services such as transfers, payments, savings, and instant credit.
“While we remain digital at our core, this licence gives us the flexibility to create more physical touchpoints where customers want in-person support or engagement, allowing us to serve Nigerians across the country in whichever ways are most convenient for them,” Mustapha said.
The fintech’s transaction volumes underscore its scale. In the first quarter of 2025 alone, Kuda processed over 300 million transactions worth ₦14.3 trillion ($10.21 billion) across its retail and business banking platforms. It also issued ₦16.4 billion ($11.71 million) in overdrafts during the same period, representing a 43% increase compared to the previous quarter.
Kuda noted that all physical expansions will be subject to regulatory approval, warning that opening a branch without CBN authorisation attracts a ₦2 million ($1,428) fine.
As Nigeria’s regulators tighten oversight of digital finance, Kuda’s transition into a hybrid digital–physical model highlights the evolving balance between innovation, scale, and regulatory compliance in the country’s fintech ecosystem.
