Core banking applications were, until recently, invisible infrastructure. Outside IT departments and regulators, few Nigerians had reason to think about the software that records deposits, posts debits, balances ledgers, and settles transfers. That changed dramatically in the latter half of 2024, when several major commercial banks upgraded or switched their core banking systems and millions of customers experienced service disruptions.
The outages pulled a typically obscure layer of banking technology into public view. But five years earlier, long before core migrations became dinner-table conversation, one digital bank had already decided that owning this infrastructure could determine whether it survived.
At Kuda, the choice to build an in-house core banking application (CBA) was made in 2019, when the company was still small, lightly funded, and operating on a third-party provider. Today, with over seven million customers, that decision stands as one of the most consequential in its history.
A High-Conviction Bet
For co-founder and CTO Musty Mustapha, the move was both technical and deeply personal.
“It was, of course, one of the hardest and probably the most daring decisions I’ve ever taken in my professional life,” he said of building an in-house CBA. “I knew I had to stick my neck on the line with my founding partner, the investors, the board, and everybody else.”
Banking’s core economic logic has not changed much over centuries: institutions collect deposits, guarantee access to those deposits, and finance the economy by extending credit. What has transformed is the machinery that powers those functions.
Today’s core banking application is an always-on ledger — the engine of modern banking. It records every deposit, loan, and transaction in real time. It ensures accounts are updated instantly, operations are reliable and scalable, and new products can be launched and managed. When it works, customers never think about it. When it fails, everything stops.
A Small Team, a Growing Bank
In 2019, Kuda’s key decision-makers could fit around a small table. The company had launched and was growing quickly, but there were no marquee venture capital backers like Target Global yet. It was live in the market and expanding — on a third-party core banking provider.
This model is standard across Nigeria. Building core infrastructure demands immense time, capital, and engineering talent — resources many institutions prefer to allocate elsewhere. Apart from Kuda, only a handful of Nigerian financial institutions, including Moniepoint and Sterling Bank, have developed in-house core banking systems.
But inside Kuda, pressure was mounting. Rapid customer acquisition and an aggressive product roadmap increased demand on the system. Instability became less tolerable. The third-party CBA struggled to keep up with the bank’s ambitions.
Mustapha recognised the tension as existential. If the infrastructure could not scale or remain stable, the startup’s future would be jeopardised.
After a series of conversations with Kuda’s CEO, Babs Ogundeyi, and the engineering team, the company embarked on building what would become NERVE — its in-house core banking system. The name was deliberate: like the human nervous system, it would sit beneath everything, quietly controlling how Kuda operated.
Mustapha was emphatic about one point: when Kuda began building NERVE, he believes no Nigerian fintech or bank had built a comparable in-house core system of that nature.
“At the time when we built NERVE, there was no fintech or banking-related company that had built its own core banking system,” he said. “NERVE is the pioneer in-house-built core banking solution by a bank in Nigeria.”
It is worth noting that Moniepoint began developing its in-house core in 2020, and companies such as Appzone were already selling core banking products like Qore to microfinance banks. Still, Kuda’s move to build and operate its own full banking core as a licensed institution marked a significant departure from the norm.
From Shopping to Building
NERVE did not begin as a foregone conclusion. Like most banks evaluating CBAs, Kuda started by shopping.
Mustapha approached multiple local and foreign providers, looking for a solution robust enough for Kuda’s ambitions and affordable enough for its 2019 balance sheet. The startup eventually launched in August 2019 on a local core banking provider.
Reality set in quickly. As Kuda raced toward one million customers, the system felt increasingly brittle. Mustapha described three compounding issues: it could not scale with growth, it could not be adapted easily to Kuda’s needs, and it could not be relied upon to remain consistently available.
“If you are offering a financial service, the minimum that you can do is to ensure that your systems are stable for your customers,” he said. “If you cannot achieve this, you can as well just pack your load and go home.”
After exhausting alternatives, the question shifted from technical to existential: what kind of company was Kuda trying to build?
The answer was clear to Mustapha. “Kuda is an engineering-first company,” he said. “That is the kind of company we’re trying to build: using engineering resources to solve financial services problems in Nigeria.”
Importantly, Kuda did not stake its survival on an immediate switchover. In September 2019, it had raised only $1.6 million in pre-seed funding from angel investors and family offices. The absence of institutional capital meant fewer layers of approval and less red tape — but also less margin for error.
NERVE was therefore developed in parallel. The bank continued operating on its third-party provider while engineers built the new core in the background. If the project failed, Kuda would still be alive — able to find another vendor or endure the one it had.
“It wasn’t like the company stopped operating,” Mustapha said. “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.”
A critical advantage was talent. The engineering team was willing to undertake a long, largely invisible infrastructure build while maintaining live production systems.
“There’s no way I would have even attempted to go ahead with it if that quality was not there,” Mustapha said. “I’m speaking about an actually world-class team.”
Engineering for Scale
Architecturally, NERVE’s design was less exotic than its ambition. Kayode Ilesanmi, one of the engineers who worked on it, said the team reached an early conclusion: a monolithic system would not deliver the scalability and flexibility they needed.
“To achieve that kind of scalability and flexibility we want, we have to go with a microservices architecture,” he explained.
They set an audacious internal target: 1,000 transactions per second (TPS). In practical terms, that meant 1,000 customers hitting the system simultaneously should feel no different than one.
At first, they could not reach 10 TPS.
The team systematically traced bottlenecks, analysed logs and metrics, and interrogated every layer — database, cache, application logic, and compute resources. Ilesanmi identified weaknesses in cache connection handling, studied how leading implementations managed it, rewrote their approach, and saw load tests jump beyond 500 TPS and eventually reach the 1,000 goal.
By the time they approached go-live, internal tests were reportedly hitting 5,000 TPS.
Migration Day: When Production Behaved Differently
Core migrations are inherently risky. Mustapha referenced the public migrations of Nigerian banks in 2024, noting that large institutions spent millions of dollars hiring global vendors yet still faced messy outages and backlash.
For a startup barely a year old, without institutional distance or deep financial buffers, the stakes were acute.
“Yes, absolutely,” Mustapha said when asked whether migration was painful. “It wasn’t all rosy.”
Kuda opted for radical transparency. Weeks before launch, it informed customers that it was switching cores, explained when it would happen, and framed the outcome as fewer failures and faster service. On migration day, the company intensified communication through emails, real-time updates, and social media threads.
In a rare twist for Nigerian banking, customers defended the bank online while services were down.
However, the initial migration plan failed.
NERVE had been tested in staging — an environment designed as a near-production rehearsal space. But when moved into production, performance degraded unexpectedly. Despite higher specifications, the production environment was slow.
“The production environment was slow, which was really weird,” Ilesanmi said. “It was an environment that had higher specifications… and the expectation was that requests… should be fast. But they were slow.”
The team reverted to staging and injected production data into it. In that environment — the one they had repeatedly tested and load-tested — latency normalised. Kuda ultimately launched from the environment that worked.
Beyond Cost: Control, Risk, and Product Velocity
While fintech leaders often frame in-house cores as a margin play, Mustapha insists cost reduction was not the primary driver.
“We didn’t take this decision… because I felt, ‘Oh, we’re going to reduce cost,’ or ‘We’re going to make lots of money out of it.’ No,” he said. “The goal… was to be in a position where we can serve our customers rightly.”
The downstream benefits, however, were significant. Owning the core improved unit economics, accelerated product development, and removed vendor constraints.
It also reshaped operational risk. With a third-party core, a bank inherits its provider’s downtime, roadmap, constraints, and security posture. By building NERVE, Kuda reduced that third-party risk.
From a product perspective, the gains were tangible. The app became faster, transfers completed more quickly, and during the COVID-19 pandemic — when digital transaction volumes surged — the system scaled. Kuda expanded internal overdrafts into customer-facing credit, launched business banking products and term loans, and introduced multi-currency wallets. The team argues these capabilities would have been slower, more expensive, or structurally harder to implement on an external core.
Operationally, improvements were equally concrete. Previously, end-of-day (EOD) routines — including ledger balancing and banking close processes — could freeze the system. With NERVE, EOD was automated and no longer locked the bank’s daytime operations.
“It became very flexible, where you don’t even need somebody to go there to run EOD, and everything runs by itself,” Ilesanmi said.
From Invisible Infrastructure to Strategic Advantage
The events of 2024 exposed core banking systems as more than back-office software. They are strategic infrastructure — the foundation of trust in a digital financial system.
Kuda’s early, high-risk bet to build NERVE illustrates how deeply technology choices can shape a bank’s trajectory. What began as an internal engineering project evolved into a defining strategic asset.
In modern banking, the ledger is not just a record. It is the product.