By Andy Jury

At this time of the year there is usually a flurry of articles attempting to lay out trends to look out for in various industries over the coming months. This is a good exercise as it gets one thinking about industries broadly and technology specifically. However, it would be remiss to embark on this exercise without first taking stock of where we are now. The fintech ecosystem is currently in a period of stress, less so for incumbents but noticeably for newcomers.

This stress is a direct result of macroeconomic pressures piling up to generate headwinds for new market entrants. As we all know, when the macro picture is less than rosy it affects play out on the ground. In summary, there is less money floating around – less money from investors and most notably, less disposable income in the hands of consumers.

Let’s take a moment to appreciate how this looks in the broader African context. Firstly, it means there is significantly less money knocking on the doors of new and innovative businesses that need investors.

Just recently, a payments processor headquartered in France lost 53% of its value – this kind of scenario has a knock-on effect across borders. However, there is a massive opportunity for fintechs that have bootstrapped themselves up in the uniquely African context.

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What does this opportunity look like? For starters, there continues to be a great deal of disruption in the market. Fintechs, mobile network operators (MNOs) and banks will approach the challenges and opportunities differently. The ones that emerge from this phase in a strong position will be those that have thought about the economics of their proposition carefully, because the opportunity that presents itself in tough times is likely more scalable from an addressable market perspective.

On the other hand, those who react will focus on price. A war on price is a race to the bottom. On the contrary, the businesses and fintechs that get through the tough times will be those that focus on customer experience (CX). It may be considered an intangible that sits between the bricks and cogs of a business, but it is crucial.

In difficult conditions, every business focuses on customers returning and using their products and services more frequently. This isn’t easy, or everyone would be getting it right. Customers with less money in their pockets become more discerning, and in our experience are looking for a full basket of genuinely personalised customer experience where affordability is a crucial component, but most certainly not the only one.

We have learnt that speed, access, trust, convenience and safety in the payments space continue to be exceptionally important drivers in customers’ decision making on where to spend their hard-earned money. At Mukuru we build very tight feedback loops with our customers and the feedback we get time and time again is speed, ease of use and safety is primary to how they develop their consideration set.

Looking ahead, regulation will continue to play an important role in how the industry evolves. The FATF’s greylisting earlier this year has had a significant impact on businesses such as ours. We are under increasing scrutiny, not because anyone thinks we present any more risk than before, but because accountable institutions must demonstrate that they are confident money isn’t being laundered or used for nefarious purposes. The result is that fintechs need to spend more time thinking and planning their products and must be tight in terms of the relationships they build with their customers.

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Regulation is also expected to present immense opportunities, especially in Southern Africa. South Africa, for example, lags other regions in the realm of mobile money. Legislation which is expected to come into play in 2025 will effectively form the framework within which e-money capabilities will be governed. This moment will be a significant game changer for the region. The ability for more people to use e-wallets more frictionlessly will add immense value in the South African context and will fundamentally change the landscape of how money is stored, used and moved.

Looking toward this big disruption on our doorstep, businesses will approach the opportunity differently. There will be those who throw mud at the wall and see what sticks, whereas we believe the real winners will be those that remain crisp and precise with their customer propositions. In this context, we believe partnerships will be vital for stability and growth, where partners enter mutually beneficial symbiotic relationships. These can take many shapes and forms, such as payment providers bridging the gap between the informal and formal sectors solving a problem for fintechs who need ways to enable their customers to pay for goods and services, and where the payment provider gets access to millions of previously unreachable customers.

Digitisation and diversification will continue to be important trends in the coming months and years. Take a moment to consider the power that MNOs and banks have traditionally exerted in the formal payments ecosystem – fintechs who are agile can enter into partnerships with other fintechs to offer similar one-stop solutions to those currently offered by the MNOs and banks. This trend will see an equalisation of influence.

Lastly, those that prioritise customer needs and wants will emerge stronger. There are two schools of thought on how you digitise money. The first is that you place a wallet in someone’s hands and encourage them to use it. This would be the traditional approach. The Mukuru approach, and certainly the approach of the more agile players, is to find a way to help people with their payment and remittance needs and then graduate them towards using a digital store of value as they develop trust in the brand and the technology.

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These are divergent approaches, but in difficult economic conditions our experience – which has seen us sign up 14-million customers across many countries – says it is better to listen to what customers want and then walk a journey with them as they become more sophisticated in their digital journeys. Our approach is to solve a problem and then gradually build trust and extend the services and products we offer, as opposed to building a shiny product and waiting for customers to arrive.

Andy Jury, CEO at Mukuru (www.Mukuru.com)

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

By Andy Jury

There are varying degrees of denial about the truth that cash won’t be king forever. Of course, many regions around the world are well on the journey to full digitisation, while others, like Africa, are at a different point on this journey. But it’s a journey they’re taking nonetheless.

The concept of digital inclusion is here to stay. We won’t wake up tomorrow and suddenly find that everyone has an e-wallet and is transacting digitally on every platform. However, we are going to continue seeing a shift from informal to formal, from entirely cash-based segments of the economy towards the uptake of various forms of digitisation. There’s an ever greater need to bridge the cash and digital divide and the platforms that will succeed are the ones that will enable people to go on this journey over the bridge between the two paradigms.

At the outset, the biggest challenges to financial inclusion remain access, trust and education. These aren’t standalone themes. Rather, they are interwoven strands of a very powerful rope that can be used to construct the bridge over the digital divide.

All new digital initiatives and start-ups that fail in Africa have missed one or more of those strands — their ropes were simply not strong enough.

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Access: Do people have access to the types of phones and devices that they need to use your service?

Education: Do your prospective customers appreciate and understand the how and why of an e-wallet and how it fits with the products and services they need?

Trust: There’s no inherent trust in any segment that has never handled a technology before; they must be shown and be allowed to feel the actual benefits of the solution, and then they’ll trust you to take them on a journey.

Once the three strands are solid, it allows customers to take control of their own destiny and that becomes a self-fulfilling prophecy.

However, it’s important for fintechs to be brave enough to take baby steps. Fintechs need to make small changes and add incremental developments that trigger large changes over time. The ingenuity of the human spirit inevitably means that as people are given a runway, they figure out how to build planes and take off into their own destinies. This may sound wishful, but consider this:

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A few short years ago, 70% of Mukuru’s network trade was cash-to-cash, meaning cash was sent and the user went and extracted that cash on the other side – traditional remittance, as it were. Today, that’s been turned around: only 49% of the trade on our platform is cash-to-cash, yet the total number of customers has grown in leaps and bounds. This powerful metric suggests that if a fintech gets all the elements right and makes small and incremental changes that customers trust and feel comfortable using, then the saying “cash is king” is well and truly on its last legs. 

While fintech is continually evolving, there are a few prominent themes that have underpinned its immense growth and success over the past few years, and which will remain important in 2022.

Remittances

Remittances remain the lifeblood for many Africans who have left their homes to work in other regions. They are an important source of income, and even funding. Remittances provide a living, an education and even the means to start up micro enterprises. Fintechs that make remittances easy and convenient, meaning that the service is found where and when they need it, will continue to make strong inroads. Platforms that integrate various digital services which allow the users of the remittance service to build increasingly sophisticated financial habits, will lead the pack.

Dual-sided networks

Dual-sided networks are going to continue gaining prominence. Perhaps the best way to describe a dual-sided network effect in the context of fintech is by way of example. Imagine a fintech remittance platform such as Mukuru having more than 10 million customers, half of whom have used the platform in the past 12 months. Then, imagine the hundreds of thousands of merchants out there who only accept digital forms of payment and who would previously have had no access to these Mukuru customers, who prior to Mukuru would have had no way of transacting with them.

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Now, the dual-sided network effect is when a platform such as ours has all these customers that can integrate into all these merchants: we can facilitate payment linkages between them such that the merchants now have millions of customers they’ve never spoken to and all these customers now have access to an array of offerings they were previously excluded from, such as sneakers from Takealot or profiles on Netflix.

This is what we mean by digital and financial inclusion, because previously they may well have had the new smartphone, but they were not part of the digital ecosystem.

Partnerships

Partnerships will become even more important, and we’re certainly seeing more businesses partnering with like-minded companies to either combine a platform that has customers with particular products, or vice versa. Partnerships lean on the respective strengths of each platform or business and provide access to an array of new customers. All partnerships need to be pursued to meet real and pressing needs of customers.

Agility

Agility is a term that is bandied about nowadays, but for a fintech to be successful it needs to be built into the company’s DNA. There are spectacular high-profile failures and start-ups that didn’t gain the traction they expected. In most cases this arises from developing a shiny solution and then waiting for the market to come to you. It is vital to listen to what the customers want and then anticipate how that will drive a shift in customer behaviour so that you can grow into that space and stay relevant. This means development cycles are quicker as companies use more and more sophisticated means of communicating and listening to their customers.

Andy Jury is group CEO of Mukuru, an Africa and emerging markets-focused money-transfer platform

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry