FinTech is ready continue to disrupt financial services and is particularly capable of stimulating large-scale formal financial inclusion. However, there is a risk that in the pursuit of innovation, companies will develop fintech solutions for technology and not to meet real needs, and that if real needs are not met, the solution (s) will win. not in popularity.
Too often, companies or entrepreneurs in the fintech space find themselves in a mindset of “building something that shines” and then anticipating that the associated demand, commercialization and scale will automatically materialize. It doesn’t work that way in Africa for a variety of reasons, the main one of which is that there isn’t a large, seamless, out-of-the-box, fully digitalized demand pool that you might find in other parts of the world. world, and for the most part, “money is always king”. Much of the addressable market still resides in an ecosystem of cash-intensive informal financial services.
Southern African banks are considering a service-based architecture that will support differentiated products for customers, especially in the application space. In terms of banking customers in the South African market, apps are certainly becoming more and more the norm. Even though bank customers do not have access to the Internet through other means, they do have access to their mobile phones and therefore there is growth in the application market.
This is certainly a positive development, but an application will only deliver on its promises if a company has found an efficient way to implement its legacy systems. In other words, developing an app without a clear multi-channel strategy will lead to more challenges than success. Working from a multi-channel environment puts a business in the driver’s seat because an application needs the good old legacy systems to run in sync – customer experience, service, and retention depend on it.
We’ve all heard the saying, “There is an app for this. Sometimes there doesn’t have to be.
Why force them?
If we agree that a product, fintech or otherwise, should exist to meet a real customer need, then we must accept that the channel chosen for a solution does not necessarily have to be the most sophisticated simply because the pool of value is numeric. If someone uses USSD or WhatsApp on a daily basis, why would you want to force them to download your financial services app that requires email login – and another level of digital sophistication – instead of allowing them to manage their finances. on a channel that he is already comfortable with? using?
Additionally, understanding that for most ‘money is always king’ is an important consideration when developing solutions for the conditions in emerging African markets. Large swathes of the economy of this country, and the rest of the continent, operate in cash. This means that a fintech solution that aims to foster financial inclusion among the underserved segments of the population must appreciate the proliferation of cash or it will miss the mark. The solution must integrate cash distribution networks and understand that the digitalization journey is a series of interconnected links in a value chain, as opposed to a single binary “switch”.
At Mukuru, this understanding has been developed by rolling up our sleeves and developing solutions specifically for Africa, in Africa. That is why, in our efforts to provide services to clients, we serve clients through a complete and vertically integrated treasury and digital network. Communication, delivery, engagement and distribution cover WhatsApp, USSD, contact center, app, website, agents and over a thousand physical locations in Southern Africa and 60 partnerships around the world to enable more 320,000 payment points. By developing this strong footprint of talking to people on the ground, we saw firsthand the importance of the next key element in unleashing the power of fintech: education.
It’s all well and good to integrate into cash distribution networks, but why would we agree to go from cash to digital?
It’s all well and good to integrate into cash distribution networks, but why would we agree to go from cash to digital? Contextualize it in your own experiences: As you read this, you’ve probably had a parent and grandparent who had bank accounts. When you left school and entered the workforce, storing and managing your money digitally was natural; that’s how it always has been.
Now imagine that someone who has had no one in their family and support network stores their wealth digitally, let alone participate in elaborate financial management. How can we expect someone who’s never encountered what you and I take for granted to have the same generational confidence in a store of digital value and be able to make the transition in one leap?
Bridging the monetary and digital divide and the formal and informal sectors is a great strength of fintech, but financial education is paramount for this to happen.
Fintech companies will continue to find new and innovative ways to deliver service to customers where and when they need it.
Although South Africa has a mature and well-established banking sector, it is a mistake in judgment to assume that everyone, including migrant workers, will have a well-established and mature mindset when it comes to services. financial. Many don’t, and they need education, starting with the basics like the importance of protecting PIN codes, to the value of treating digital solutions as more than channels for business. money.
Many of South Africa’s entry-level bank accounts are mechanisms for channeling cash (in the form of payments), so it is up to the financial sector to inform users. that they do not need to withdraw all of their funds at once and that it is safe to store their money digitally. Expect to see significant efforts in the industry to educate, influence, and inspire customers to make this behavior change.
The future of fintech in South Africa
Fintech is pioneering by its very nature, and fintech companies will continue to find new and innovative ways to deliver service to customers where and when they need it.
More and more advanced technology players can provide service in their areas of specialization more skillfully and efficiently than a larger legacy institution. This usually comes with a better customer experience, and almost certainly at a more attractive base price than they could achieve. The upshot is that we’ll likely see more and more banks deciding that instead of competing with agile fintech players, they’ll ask how they can leverage their expertise. Rather than reorganizing already existing solutions, the keyword will be partnerships.
Ultimately, the customer, the person on the street, will be the beneficiary as the entire financial industry will be better placed to share experiences and learn from each other, especially on how fintech is managing to serve segments. unbanked and underserved.
There is no turning back and regulators and industry players know it. It is important for the fintech industry to see the value inherent in constructive engagement with regulators. Compliance is a business enabler, not a handicap. It is by working together that we can unleash the true power of innovation and technology to solve important challenges and serve more people. And you don’t always need an app for that.
Mukuru is a next generation financial services platform that provides affordable and reliable financial services to emerging consumers in Africa. With over 50 million transactions to date, our core business has been designed to provide international money transfers. From this foundation, we have developed a set of services to meet the broader financial needs of our clients.
We are a company that puts the customer at the center of everything we do, and for this reason, we serve customers through physical and digital channels, by all means of payment (cash, card, wallet) as well as a range of engagement platforms including WhatsApp, USSD, contact center, app, website, agents and a network of branches and booths.
Mukuru was listed as one of the Top 150 Cross-Border Companies in the World in the 2020 FXC Intelligence Incumbents vs Challengers in Cross-Border Payments Rankings.
Mukuru won three awards in 2021. In July, he also won South Africa’s Most Innovative Financial Services Provider 2021 at the World Economic Magazine Award Winners 2021 as well as at the International Business Magazine Award 2021. In April , Mukuru won Top Honors for Most Innovative Online Money Transfer App – South Africa, 2021 at the 2021 Global Brand Awards.
More information is available at www.mukuru.com/the-mukuru-group.
- The author, Andy Jury, is CEO of Mukuru
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