Employees joined a video call with senior executives on Wednesday, March 25, where many learned their roles had been terminated. The cuts affected several departments, according to people familiar with the process and internal documents.

In a response sent on Friday, a company spokesperson said: “Kuda is evolving how the organisation is structured to support the next phase of our growth and scale. This is not a decision driven by financial pressure, but part of the natural evolution of a company at our stage, aligning with industry benchmarks.”

Executives told staff the decision was not tied to individual performance. Instead, they said it followed a strategic review that looked at long-term priorities and how the company compares with others in the sector.

“As part of this process, some roles across the business have been impacted. We know this is difficult, and these were not decisions we took lightly,” the spokesperson added.

“We are supporting those affected with enhanced severance packages and practical transition support, while staying focused on serving our customers and continuing our long-term growth.”

Inside the company, the announcement did not land smoothly, as some employees found it difficult to join the initial call after the meeting link failed.

When it finally started, executives confirmed the layoffs without much detail, leaving questions about how decisions were made.

One internal document sent to affected staff read: “Following a strategic review of future operational priorities, industry benchmarking, and long-term direction, the Company has identified the need to restructure and reorganise certain departments.”

The impact affected some teams more. Nineteen out of forty employees in the marketing unit were affected, according to two people who said they were part of the process.

Kuda has offered severance packages that differ by role and length of service. Some employees expect payouts of up to seven months’ salary and the company is also proposing an enhanced exit option tied to a settlement agreement.

Part of the notice states: “The enhanced severance payment would be conditional upon you entering into a legally binding settlement agreement… [and] agree not to bring any claims.”

The layoffs come at a time when the company’s financial position has been improving. Losses dropped from $35.11 million in 2023 to $5.83 million in 2024. Revenue from its Nigerian unit nearly doubled to ₦21.2 billion, while operating costs fell.

At the same time, activity on the platform has grown. Kuda processed transactions worth ₦14.3 trillion in 2025, more than in its first five years combined. It also issued ₦16.4 billion in overdrafts, a 43% increase over the previous quarter.

Even so, the environment for fintech firms has changed. Funding into African fintech dropped by more than half in 2024 compared with the peak years of 2021 and 2022.

Investors now want clear profit, not just rapid customer growth. Kuda’s $20 million raise in 2024, at a $500 million valuation, shows that change in direction.

Across the industry, others are making similar moves. Companies such as OPay and Moniepoint have adjusted their teams in recent months, while Flutterwave has faced regulatory issues in key markets.

At the same time, oversight from the Central Bank of Nigeria and foreign exchange limitations continue to weigh on margins.

Kuda, which has about seven million customers, is also dealing with stronger competition from traditional banks expanding their digital services.

As it stands, Kuda Bank says the restructuring is about positioning for growth. Inside the business, however, the sudden nature of the cuts has left many employees trying to make sense of what comes next.

Enter neobanks—digital-first, branchless financial platforms that leverage artificial intelligence (AI) to deliver faster, cheaper, and more personalised services.

With names like Chime, Revolut, Chase, and Monzo gaining global traction, these fintech disruptors are rewriting the rules of banking. But how exactly are they outmanoeuvring traditional banks, and what role does AI play in their success? Let’s dive in.

What Are Neobanks?

Neobanks are 100% digital financial institutions that operate exclusively online or through mobile apps. According to kat Tretina, unlike traditional banks, neobanks lack physical branches, which allows them to slash overhead costs and pass the savings to customers in the form of lower fees, higher interest rates, and innovative features.

But their true edge lies in their tech-first DNA. AI and machine learning (ML) are baked into every aspect of their operations, from risk assessment to customer engagement.

The AI Engine Behind Neobanks

Here’s how AI is fuelling the neobank revolution:

1. Hyper-Personalised Banking

Traditional banks often treat customers as account numbers, but neobanks use AI to analyse spending patterns, income streams, and lifestyle data to deliver tailored financial insights. For example:

• Chime uses predictive analytics to notify users of potential overdrafts before they happen and offers “SpotMe” fee-free overdraft protection.
• Revolut analyses transaction histories to recommend budgeting tools, investment products, or currency exchange strategies for frequent travellers.

2. Smarter Fraud Detection

AI algorithms monitor transactions in real time, flagging anomalies that could indicate fraud. For instance:

• N26 employs ML models that learn from user behaviour to distinguish between legitimate purchases and suspicious activity, reducing false positives.
• Starling Bank uses AI-driven biometric authentication (e.g., facial recognition, voice ID) to secure accounts.

3. Instant Credit Decisions

Neobanks bypass lengthy credit checks by using alternative data such as gig economy earnings, rent payments, or even social media activity to assess creditworthiness.

Examples are:

• Varo Money leverages AI to approve loans in minutes, even for thin-file customers ignored by traditional lenders.
• Klarna (a buy-now-pay-later neobank) uses ML to adjust credit limits dynamically based on real-time spending behaviour.

4. 24/7 Customer Support

AI-powered chatbots like Cleo and Erica (Bank of America’s hybrid response to neobanks) handle routine inquiries, resolve disputes, and even offer financial advice, reducing reliance on human agents.

Why Traditional Banks Are Playing Catch-Up

Legacy banks are hamstrung by outdated infrastructure, regulatory complexity, and cultural inertia. Meanwhile, neobanks thrive by:

• Eliminating friction: Opening an account takes minutes, not days.
• Prioritising UX: Intuitive apps with features like round-up savings, instant notifications, and gamified financial goals.
• Scaling globally: Without physical branches, neobanks like Revolut and chase can expand into new markets rapidly.

Challenges Ahead for Neobanks

Despite their meteoric growth, neobanks face hurdles:

• Profitability: Many still rely on venture capital, struggling to monetize free services.
• Regulation: Compliance with evolving financial laws (e.g., GDPR, PSD2) requires costly AI-driven tools for KYC/AML.
• Trust: Convincing older generations and risk-averse customers to abandon traditional banks remains an uphill battle.

The Future: Banking as a Seamless, AI-Driven Experience

The neobank revolution is just beginning. As AI advances, expect:

• Predictive financial planning: Apps that auto-adjust budgets based on life events (e.g., job loss, marriage).
• Decentralised finance (DeFi) integration: Neobanks bridging traditional finance with blockchain-based lending and investing.
• Open banking ecosystems: APIs enabling neobanks to aggregate data from multiple financial providers for holistic money management.

Conclusion

Neobanks aren’t just a trend—they’re a blueprint for the future of finance. By harnessing AI to prfioritize speed, transparency, and customer-centricity, they’ve exposed the inefficiencies of traditional banking. While challenges remain, their agility and innovation suggest a financial landscape where banking isn’t just a service but an intelligent, always-on partner in managing money.