Digitalisation is slowly becoming the face of the new world. While Africa is just tapping into that dimension, it would seem Africa spent time dawdling for so long. This would resemble the sentiment from other countries about Africa. But in reality, some of the groundbreaking solutions now in use originated from Africa. For instance, the digital wallet that Mark Zuckerberg recently introduced to Facebook, where anyone can send money as quickly as sending photos, has existed in Africa; Airtel initiated the idea in the early 2000s. M-Pesa also has been doing this since the turn of the millennium.
Moreover, payment solutions platforms in Africa have been at the front row of the fintech industry in the world. Although America may have kick-started this idea as far back as 50 years ago, Africa has taken this idea by the scruff of the net. In Africa, the challenges of fintech companies are glaring and global banks can pick a lesson or two from how some of the challenges have been dealt with. Over here in Africa, if you win the customers’ trust, you may as well be on your way to having a viable company. Trust comes with loyalty; these attributes are what fintech companies in Africa target.
There are lessons to be learned, tips to be picked as we dissect this cause of the growth of fintech companies in Africa. Some of these tips are as simple as they come but also involve strict due diligence to the formula. The following tips are proven to be the cause of exponential growth in the fintech companies in Africa today.
1. There is no room for segregation in terms of solutions
If you experience growth as a fintech startup, you will be all-inclusive. Financial inclusion is the topmost priority of African fintech. Although many traditional banks are on the continent, millions of people do not have a bank account. Some citizens, because they do not want to undergo stress. Others believe they will be short-changed. You can’t deny that these facts are reasons. An average market woman who manages to save a few thousand opens a bank account and finds out that a massive chunk of her money has been removed for “maintenance” of her account. She will close that account and resort to the archaic styles of saving money via thrifts and piggy banks.
But if a bank offers her zero fees for maintenance and she can open her account right there in the comfort of her room, of course, that is what she would use. According to a report by fintechfutures.com, “financial inclusion is not just about having access to a bank account to put money in. It is about having access to advisory services that enable their businesses to thrive and expand.” By all means, everyone will frolic with an opportunity that gives their businesses the right wings and help them find their feet.
2. Every Mobile, Internet Outlet is a Channel
There are over 400 million registered mobile money accounts across sub-Saharan Africa alone. There is a boom in mobile phone ownership and if you are planning on starting a fintech company, here is your most significant chance. What has been grossly underreported is the prominence of some unheralded technologies in Africa. The Short Message Service (SMS), for instance, is a force used by fintech companies. Apart from the fact that it is easily accessible, it is also cost-effective. You don’t have to have a smartphone to use these services. There is also the Unstructured Supplementary Service Data (USSD). Fintech companies have harnessed these technologies to penetrate sectors where traditional banks were not present.
In China, these technologies were also used alongside social media tools. In 2018, the Chinese FinTech market accounted for 46% of all FinTech investments globally. That’s a massive achievement. While the FinTech market is built on other technological gadgets in America, it relies heavily on mobile phones in Africa. This method has yielded tremendous results. Little wonder, according to the International Monetary Fund, four of the top five fastest-growing GDPs in the world are in African countries (Ghana, South Africa, Rwanda and Kenya), which have tapped into the FinTech market.
3. Win the Trust of Your Customers
This is a major concern with traditional banks in the U.S and Africa. Interestingly, these banks know this but fail to reinvent this fact in new products. FinTech companies in Africa, for instance, offer all the agility, but with a relentless pursuit of winning the trust of customers and prospects. It is an impossible combination of attributes to have. When you win the trust of your customers, you will automatically gain their loyalty for years to come. It is as simple as this. A typical example is the hybrid firm, Equitel, an amalgamation of Equity bank and Airtel in Kenya. What did they do? Simple. They found a way to borrow consumer trust from the already established brands. Then they added inventiveness and agility, and that was practically all they needed to thrive, Harvard Business Review reports.
A combination of all these tips is a guarantee of success. Yes, government policies can be challenging to the growth of the industry, but when you win the people’s trust, you will automatically win the government’s trust. It may take a lot of time, but this is where consistency comes to play.
by Charles Kollo
SVP, Sales and Marketing