Djamo: banking francophone Africa

Biography

Hassan Bourgi is the co-founder of Djamo.

Djamo is a mobile challenger bank for francophone Africa. It offers money management services, saving functionalities, money transfers and a Visa card (among other things).

Djamo was the first startup from Ivory Coast to get into Y-Combinator. In 2022, the company raised a $14M Series A. Djamo operates in Ivory Coast and Senegal.

Before Djamo, Hassan founded Busportal, a Peru and Colombia-based online ticketing platform. He sold it to Naspers in 2019.

This interview was conducted and written by Timothy Motte.

Djamo has a subscription model. Why not take a cut of the flow of money?

We operate in francophone West Africa. It’s always more challenging for startups in our region to raise capital. We figured that showing financial traction, not just user traction, early on would increase our fundraising prospects. Due to low initial transaction volume, a subscription model made sense.

Today, we offer a freemium model. Users can use Djamo for free but pay if they want advanced features, such as free money transfers to any wallet or priority customer service. The option to bank for free is a revolution: virtually all regional banks charge their customers a “maintenance fee” regardless of their banking usage.

On top of recurring revenue, a subscription product can boost a product’s usage. If you pay an Amazon Prime subscription, you are incentivized to “use it” and buy stuff on Amazon. It’s the same with Djamo: if you have a premium account, you’re nudged to use our products more.

That increased use benefits us. Merchants pay us “interchange fees” whenever a client uses the Djamo card. In other words: merchants pay us to process payments coming from our cards.

In essence, we run a subscription model but we mostly make money off transaction flows. It’s just that we tap the merchant side rather than the user side.

Djamo’s flagship product is its Visa card. How does one launch a Visa card?

The process usually takes between 8 and 12 months. You need to get approval from your local central bank, find a local bank to sponsor you and complete Visa’s requirements. The process taught us to prepare for country launches way ahead of time.

Once you grow, investors want to see progress on the regulatory side, especially for fintech products. Traction doesn’t suffice anymore. Being compliant, more so in complicated geographies, is becoming a moat.

Compliance can’t be an afterthought. A founder should dedicate as much resources to their regulatory and compliance team than to their product team. It gets easier the more you do it, since national regulatory frameworks resemble each other. But it’s a muscle to train.

Why do you need to partner with local banks? Wouldn’t it be faster to go at it alone?

For two reasons.

First, partnering with banks allows us to launch into new markets much faster. In our region, only financial institutions can carry out cross-border transactions. If we wanted to offer that functionality, which we did, we needed partners with the right licenses. Today, we have two partner banks in Côte d’Ivoire and one in Senegal.

Second, we needed to issue “local” cards (ones connected to a local banking institution) because most merchants have fraud algorithms. These algorithms are way more inclined to accept local cards than foreign ones. By partnering with no bank or a foreign bank, you negatively impact your cards’ success rates. That’s terrible for customer experience, particularly if the card is your star product.

That being said, we are becoming more independent. We’ve applied for our own licenses. We’ve just gotten a brokerage license for the WAEMU region, enabling us to offer investment products. We also have a microfinance bank license application underway.

You’ve launched a B2B product. Why so early?

It’s more a B2B2C product. It helps businesses pay salaries digitally. The product only enables salary payments to Djamo accounts. It’s a way to start dabbling in B2B products, but also a nudge for people to create Djamo accounts.

Salary payments play into our larger vision: become the primary bank for Africa’s digital natives. For a bank to be your primary bank, it needs to receive your salary. So we’re highly focused on that. One of our B2C functionalities is the ability to generate an IBAN to receive salary payments, for example.

How are you different from Wave, or other mobile money products?