LemFi, a London-based financial services platform designed for immigrants, has secured $53 million in new funding to accelerate its growth and expansion into new markets. The fintech, which has been rapidly growing since its launch in 2020, aims to further establish itself as a leading player in the remittance market, particularly among diaspora communities in North America and Europe sending money to emerging markets across Africa, Asia, and Latin America.

The remittance market has become a vital source of foreign exchange for many emerging market economies, with inflows surpassing $669 billion in 2023, according to World Bank research. Despite fierce competition from new tech challengers, traditional banks and agents still maintain a firm grip on the market, holding over 60% market share. LemFi, along with other fintechs like Remitly, Zepz, and Taptap Send, is vying for the remaining share.

LemFi's growth has been remarkable, with over one million active users relying on its multi-currency accounts to transfer money to friends and family in 20 send-to countries. The company's revenue comes from transaction fees and foreign exchange spreads. Last week, LemFi expanded into Europe by partnering with embedded finance provider Modulr, which will help kickstart operations until it secures its license next month after acquiring a Republic of Ireland-based firm. With this move, LemFi now operates in 27 send-from markets and 20 send-to countries.

One key factor contributing to LemFi's success is its aggressive fraud detection. According to a recent report, people sending money abroad are nearly four times more likely to fall victim to financial fraud than those who don't. LemFi co-founder and CEO Ridwan Olalere emphasized the importance of keeping fraud rates low, stating, "Fraud can significantly drive up costs. Higher costs often mean passing them on to customers through additional fees. We've managed to keep our fraud rate extremely low, allowing us to offer customers the best possible prices."

LemFi's user experience and reputation have also helped differentiate it in the competitive market. About 70% of LemFi's earliest customers still use the platform, while 60% of its customer base is active yearly. The fintech has recorded significant growth, with over $2 billion in annual transaction volume in 2023. Currently, it is processing $1 billion in monthly payment volume, with the Asian corridor contributing $160 million in monthly TPV and growing 30% month-on-month within its first year of launch.

The company has doubled users, revenue, and transactions over the past two years, attracting investor interest and confidence. This growth momentum led to a Series B round led by Highland Europe, a London-based growth-stage investment firm that backs startups with more than €10 million in annualized revenues. The round also saw participation from existing investors Endeavor Catalyst, Left Lane Capital, Palm Drive Capital, and Y Combinator, bringing LemFi's total funding to $85 million.

LemFi plans to use the funding to extend its offerings, scale its payment network licenses and partnerships to provide hyper-localized service, and recruit talent for its next growth phase. The firm currently has more than 300 employees across Europe, North America, Africa, and Asia. Olalere noted, "While regulations market by market remain complex and we have more stakeholders to deal with, scaling has become a lot easier for us because we have technology that is adaptable and can easily plug and play to different payment methods and schemes."

Looking ahead, LemFi intends to expand into as many markets as it has a significant number of immigrants, starting with Europe this year. With its sights set on becoming the go-to fintech for the Global South diaspora, LemFi is poised to make a significant impact in the remittance market and improve the lives of millions of people around the world.