Kuda Microfinance Bank is set to expand its physical footprint across Nigeria following approval by the Central Bank of Nigeria (CBN) to operate as a National Microfinance Bank (MFB), a move that allows the digital lender to offer nationwide in-person customer support.
The licence upgrade removes the geographic restrictions tied to Kuda’s former unit microfinance bank status, which limited physical operations to a single location despite its nationwide digital reach. With national coverage now permitted, the bank plans to establish experience centres across the country to support customer service, complaint resolution, and community engagement, while keeping digital banking at the core of its operations.
“Securing a national microfinance banking license is an important step for us as a regulated institution,” said Musty Mustapha, Managing Director and CEO of Kuda MFB, in a statement.
The expansion reflects a broader regulatory shift by the CBN to align licensing structures with the scale at which fast-growing fintechs operate. As digital banks attract millions of customers nationwide, regulators have increasingly emphasised the need for physical touchpoints to ensure customers—particularly those in the informal sector—can resolve issues offline when required.
However, the move comes with higher operating costs. National licenses push fintechs closer to the traditional banking model, introducing expenses linked to physical offices, staffing and more stringent compliance obligations. This development tests the low-cost advantage that has long defined digital-first banking in Nigeria.
On January 26, 2025, the CBN announced it had upgraded the microfinance bank licenses of several major fintechs, including Kuda, Moniepoint, and OPay, to national status. The apex bank said the decision reflected the scale of its operations and the need to guarantee customer access to physical offices nationwide.
While CBN guidelines do not spell out a direct upgrade path from unit to national MFB status, they set clear expectations around physical presence. State microfinance banks seeking national licenses, for example, are required to operate at least five branches, reinforcing Kuda’s plans to roll out multiple offices in the coming months.
The national licence also places Kuda under tighter regulatory and disclosure requirements. National MFBs must publish audited annual accounts in a national daily newspaper, increasing transparency and public accountability.
Capital requirements rise significantly as well. Unit microfinance banks are required to maintain a minimum paid-up capital of ₦200 million, while national microfinance banks must hold at least ₦5 billion. Kuda appears well positioned to meet this requirement, having raised $20 million in 2024 at a reported valuation of $500 million.
Despite its plans for physical expansion, Kuda said it would continue to prioritise digital 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 scale of Kuda’s operations is reflected in its transaction volumes. In the first quarter of 2025, the bank processed more than 300 million transactions valued at ₦14.3 trillion across its retail and business banking platforms. It also issued ₦16.4 billion in overdrafts during the period, representing a 43 per cent increase from 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 fine.
As regulatory oversight of digital finance tightens, Kuda’s transition to a hybrid digital and physical model highlights the evolving balance between innovation, scale, and compliance within Nigeria’s fintech ecosystem.
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