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From a Students’ Project to FinTech Unicorn — The Mambu Story
Thanks to smart fintech startups, a new banking era is in full swing. While consumers were demanding agile solutions, the sector has suffered from notoriously poor customer experience and major incumbents had been slow to adapt. That’s where Mambu came into play: by offering a lean, cloud-based core-banking solution for financial services, Mambu has revolutionized the banking game — for microfinance organizations in under-banked countries, flashy FinTechs and big banks alike. Founded as a students’ project, Mambu stayed under the radar until CEO Eugene Danilkis announced a $135M Series D at a $2B+ valuation and plans for 1,000 ‘Mambuvians’ in offices around the globe.
Change the bank? Revolutionize banking!
The world is in great need of smart ideas. So is banking. Disruption is roaring full-steam ahead and startups are challenging big players to quickly change the bank while running it. Global FinTech-focused VC investment ballooned from $1.89 billion in 2010 to $42 billion in 2020, and, fueled by the growing Asian and African markets, this growth is expected to continue. While big banks like JPMorgan Chase are now putting their banking staff through mandatory coding training and investing in better tools in order to “change the bank”, Mambu has long set out to revolutionize it. Launched as a SaaS-startup, it has now grown into one of Europe’s FinTech unicorns.
Revolution starts on campus. This one began with a school project by three master’s students at Carnegie Mellon University in Pittsburgh, Pennsylvania. Eugene Danilkis, Frederik “Freddy” Pfisterer, and Sofia Nunes were working on an assignment on micro lending. After contacting banks in emerging African countries, the trio realized that they were onto something: the operating systems these banks were using turned out to be outdated, non-existent or too complex for simple products.
“Tech for good” & global thinking is part of Mambu’s DNA
In May 2011, the former co-students launched Mambu, a startup that provided cloud-based microfinance software-as-a-service technology. Its proclaimed mission was “to enable individuals and emerging enterprises to pursue economic opportunities through access to financial services — everywhere around the world.” Instead of focusing on traditional bank loans in over-banked markets, they based their business idea on the “micro credit theory” by Bangladeshi social entrepreneur, banker, economist, and Nobel Peace Prize winner Muhammad Yunus: micro institutions give micro credits to micro or small enterprises previously neglected by conventional loan institutions.
With a founder team made up of a Canadian, a German, and a Portuguese, global thinking is by nature an integral part of the Mambu’s DNA. So is local action. When Mambu launched, nearly 30% of the global population and millions of enterprises were unbanked. Taking local banking and lending regulations into consideration proved to be a huge advantage when establishing business in these areas of the world. While the industry was in need, the agility and low operating cost of Mambu’s cloud-based services were unbeatable, and more and more regulators not only approved, but encouraged its use.
“Mambu literally provided development aid.”
Within just two years, Mambu’s cloud-banking technology was adopted by 100 microfinance organizations in 26 countries worldwide — from Colombia to Mexico, from Nigeria to the Philippines. In May 2014, exactly three years after its launch, three financial startups from Angola, Kenya, and Nigeria chose Mambu as their core-banking platform to launch their businesses. “The challenge of servicing the under-banked is particularly acute across Africa, where physical distance makes the ‘bricks and mortar’ approach of traditional banking just too expensive,” explains co-founder and CEO Eugene.
Nigeria, for example, is the seventh most populous country in the world, but at that time nearly 80% of the adult population had no access to basic banking services. “Mambu literally provided development aid,” says Fritz Oidtmann, Managing Partner at Acton Capital.
By the time Acton Capital’s first investment took place, Mambu was active in more than 30 countries. “Whereas many other companies would have been overwhelmed by the complexity of three or four countries, it was simply amazing how serenely they managed their business,” the Acton partner remembers. And the business continued to grow rapidly. Mambu was considered “the leading SaaS core banking engine” and had refined its product and business model. Now, the company not only focuses on small bank lending and micro loans, but also on so-called challenger banks and peer-to-peer lending. “We at Acton were impressed by how quickly Mambu, its software, and its customers have evolved.”
“Ask why until it feels awkward — and then ask once more”
In 2017, the company was included in the FinTech 50 for the 3rd consecutive year and won the Asian Banker Technology Award for Best Cloud Application. Soon, big banks began to take an interest in the software. Being forced to undergo major changes, not just from automating jobs and hiring coders, but also from investing in smarter software solutions, traditional banks began looking at startups to partner with. Tech experts in the banks’ IT departments were already swooning over “the lean, agile, cloud-first alternative to legacy core banking systems,” — Mambu’s tagline.
“Building a FinTech, like most new businesses, is a journey of endurance and resilience,” said CEO Eugene Danilkis on what it needed to make Mambu the global category leader. “Build on what works, understand the value clients are looking for and differentiate based on this. Listen but listen deeply to their needs, and not their specific requests, and ask why until it feels awkward — and then ask once more. Then you’ll really start to understand what’s going on.”
But the liability experts in the banks’ legal departments were still hesitant. Due to their intrinsic risk-aversion, big banks feared a start-up’s solution might malfunction, shut down, or run out of money. Instead, they opted for an inferior, more expensive offering, provided by a solid corporation like SAP or Temenos. “In the end, it was a matter of trust. To determine Mambu’s credibility, our investor’s perspective proved to be very helpful,” remembers Fritz Oidtmann. When the decision makers of big banks asked what convinced us to invest, we knew exactly what to say. It was the compelling combination of Mambu’s smart and easy product, its sustainable cash flow and the dedication of the team.” Acton Capital was able to dissipate doubt and helped the startup reach another significant milestone.
But banks were still hesitant: “In the end, it was a matter of trust.”
To advise the startup on its future growth trajectory, Acton introduced Henning Kagermann to Mambu as a potential independent board member. The well-known technology expert and theoretical physicist was the former CEO of SAP, the industry incumbent. “Before they met, both parties had reservations,” remembers Acton Partner Fritz Oidtmann.
On one side: an experienced corporate manager, member of several supervisory boards including Deutsche Post, Deutsche Bank, and Munich Re, former president of acatech, the National Academy of Science and Engineering in Germany, and SAP veteran of 27 years. On the other: an innovative FinTech startup with 80 employees. “But within ten minutes it was obvious that there was a mutual understanding,” Fritz recalls. “His insights will be invaluable,” stated Mambu CEO Eugene when Kagermann decided to join the startup in June 2018. His sector expertise and operational experience helped the young company to further expand, grow, and evolve — from lending to retail banking.
From go-kart to Porsche — with more than 500 ‘Mambuvians’
Today, Mambu’s core banking software does not only cover lending and deposits, but a full range of applications and services. As many banks are still operating with legacy monolithic structures, only the Mambu platform is able to integrate whole ecosystems from technology partners. Mambu’s USP is its “composable banking” approach, to design and deliver banking services that prioritize the fast, flexible, safe and easy assembly of independent, best for purpose systems. As some competitors started to offer modular core banking systems combining pieces into one, pre-set solution, their clients are locked in to one vendor. With Mambu, though, banks are gaining speed and flexibility, while they can rely on the highest security standards.
Clients these days include big banks like Santander, multinational telcos like Orange, Georgia’s first cloud-only bank Space and FinTechs like N26 or Oak North. In the past years, Mambu moved its headquarter from Berlin to Amsterdam, and opened offices in Abu Dhabi, Singapore, London, Amsterdam, Miami or Sydney. The company powers over 6,000 products in more than 55 countries — simple, streamlined and automated. It meets evolving digital banking demands around the globe.
In January 2021, Mambu annouced the closing of a $135M Series D at a $2B+ valuation by investors including TCV, Bessemer, Tiger Global and — of course — Acton Capital. In the German newspaper Handelsblatt CEO Eugene Danilkis just revealed the scaleup’s plans to double the number of employees from 500 to 1,000 by 2022. “Having started with a go-kart engine,” Fritz Oidtmann notes, “today, Mambu builds a Porsche by working with third-party service providers to supply the components.” The ‘Mambuvians’ continue to passionately drive progress, growth and, well, the global FinTech revolution.