Nigerian Neobank Kuda Builds Own Banking Software

While other Nigerian banks struggled with software crashes in 2024, Kuda had already solved the problem years earlier by doing something most financial institutions avoid: building their own core banking system.

In 2019, Kuda was a tiny startup running on borrowed technology. The neobank had just raised $1.6 million and was growing fast, but the third-party software powering their accounts kept cracking under pressure.

"If you are offering a financial service, the minimum that you can do is to ensure that your systems are stable for your customers," said Musty Mustapha, Kuda's co-founder and chief technology officer. "If you cannot achieve this, you can as well just pack your load and go home."

Most banks in Nigeria rent their core banking software because building it requires millions of dollars, years of work, and world-class engineers. Mustapha knew the risks, but he also knew staying on unreliable systems could kill the young company before it got started.

Instead of betting everything on an unproven rebuild, Kuda ran both systems side by side. Customers kept banking on the old system while engineers quietly built NERV, named after the human nervous system, in the background.

The parallel approach meant if the new system failed, Kuda wouldn't collapse with it. The startup would survive, find another vendor, or make do with what they had.

"We were still on the third-party provider system, still serving customers, still growing, but we'd decided and were treating it as a side project," Mustapha explained.

The Ripple Effect

Today, NERV powers all of Kuda's seven million customer accounts. The system processes every deposit, withdrawal, and loan without the instability that plagued their early days.

The success changed what seemed possible in Nigerian fintech. A handful of other institutions, including Moniepoint and Sterling Bank, have since built their own core banking systems, proving that African startups don't have to rely on foreign or third-party technology.

Kuda's engineers proved that an "engineering-first" approach could solve Nigeria's financial services problems without waiting for perfect conditions or massive funding rounds. They built world-class infrastructure with a small team and limited capital because they had conviction in what they were creating.

The gamble that Mustapha called "one of the hardest and probably the most daring decisions" of his career didn't just stabilize one startup; it showed an entire industry what homegrown innovation could accomplish when given the chance.