NMB Bank Built APIs Instead of Funding Startups
Corporate Bongo analysis #1
Based on direct interviews and NMB’s 24th Annual General Meeting (AGM) proceedings. Additional market data provided by Solomon Stockbrokers.
Originally published in Atoms & Bits Magazine (July-October 2024). That was before:
The Tanzania Startup Association (TSA) and NMB signed a memorandum of understanding (MoU).
The Bank of Tanzania (BoT) announced the launch of its fintech regulatory sandbox.
NMB Bank has taken an unconventional approach to supporting Tanzania's startup ecosystem. It focuses on technical infrastructure rather than traditional incubation programs.
In 2021, the bank began reimagining its fintech partnerships strategy under current Head of Innovation Josina Njambi, who noted that digital channels were already handling 93% of transactions with 24% year-over-year (YoY) growth while branch transactions declined by 10%.
By 2024, this digital transformation has accelerated significantly. The bank's latest financial statements (H1 2024) show customer deposits reaching TZS 8.9 trillion ($3.3Bn) across 234 branches.
Electronic channels, on the other hand, processed 134 million transactions in 2023, a 61% increase YoY.
Only 4% of its transactions happen at physical branches, with 4.95 million Mkononi app/USSD service subscribers and 1 million daily active users recorded in 2023.
During the same year, 84% of new retail customer accounts (924,000) were opened digitally, demonstrating strong user adoption of digital services.
These numbers have shaped NMB Bank's current startup engagement strategy, which emphasizes API access and technical integration over equity investment.
Instead of picking winners through loans, grants, or buying shares, NMB now lets any company plug into its banking systems.
Their sandbox allows any fintech to test features like checking balances, handling transfers, and processing payments using Python, React, or other common programming tools before releasing a financial product.
The bank's approach revolves around three recently upgraded elements:
A revamped NMB Mkononi Platform with improved API access
Modernized core banking infrastructure with updated server architecture
A new Software Defined Wide Network Area (SD-WAN) for improved security and efficiency
This strategy appears to be working alongside NMB's main business growth. The bank reported TZS 314 billion in profit for H1 2024, maintaining strong financial performance while investing in digital infrastructure.
Current integration priorities focus on four key areas that align with Tanzania's market needs:
Payment systems modernization
Agritech solutions (NMB loans to the agriculture sector grew by almost 40% each year between 2019 and 2023, reaching TZS 756 billion)
Alternative data for credit scoring
Digital tools for enterprises (backed by TZS 775 billion in MSME loans)
However, there are some challenges. The bank's rapid loan growth has outpaced deposit mobilization, creating funding pressure that could affect fintech partnerships.
To address this, NMB is deploying new deposit initiatives targeting digitally-enabled customer segments. Integration timelines, on the other hand, remain lengthy due to compliance requirements, which are a necessary friction point given Tanzania's evolving fintech regulations.
What makes NMB's approach notable, at least to us, is its focus on providing foundational infrastructure rather than just funding. The bank's recent software and network upgrades show a commitment to building strong digital rails for the ecosystem.
Its updated mobile banking platform allows for controlled experimentation with core banking functions. That’s a critical resource for startups.
The API-first strategy is a major shift in how Tanzanian banks can engage with fast-growing companies. Rather than competing with financial innovations, as some telcos do, we see NMB as an enabler of digital transformation.
Technology chief Kwame Makundi has overseen this direction since 2021, while Ms. Josina leads a 30-person department that builds digital banking products.
Mobile money expert Maria Magdalena Mwamyalla joined in August 2024 as NMB Bank's first fintech partnerships manager. We'll watch this space.