What Makes ‘Inclusive Fintech’ Truly Inclusive?
13 OCTOBER 2016
SummaryStarting back in the 1980s with the launch of Grameen Bank in Bangladesh, the concept of inclusive growth has been instrumental in fighting poverty and providing opportunities for marginalised communities to uplift themselves. When it comes to the provision of fintech services, however, which combine advances in digital and mobile technology with financial applications, inclusivity is not a prominent feature. Arguably, the underbanked and unbanked population have the most to gain from the fintech boom – so how can fintech become more inclusive?
Starting back in the 1980s with the launch of Grameen Bank in Bangladesh, the concept of inclusive growth has been instrumental in fighting poverty and providing opportunities for marginalised communities to uplift themselves. An important element of inclusive growth over the years has been productive employment, with people in rural areas being given the means to access more services – including financial services.
When it comes to the provision of fintech services, however, which combine advances in digital and mobile technology with financial applications, inclusivity is not a prominent feature. Indeed, the impressive rise of fintech companies and entrepreneurs has, to date, been focused on developed markets, with the provision of products and services aimed at customers who already enjoy a degree of sophisticated banking and financial technologies. Arguably, the underbanked and unbanked population have the most to gain from the fintech boom – so how can fintech become more inclusive?
There are few examples of inclusive fintech, although there will be many more soon. The most famous is surely M-Pesa, which is mitigating the monstrous problem of costly domestic remittances in Africa.
Window of Opportunity
Without doubt, forward looking fintech providers have a massive opportunity before them to pioneer inclusive financial services and to harness growing feature phone and increasingly, smartphone penetration in emerging markets. In addition to this mobile penetration, these markets are generally very young, tech savvy, and eager to be included in the next waves of digital innovation. When services can truly solve a problem, at the right price, adoption rates have the potential to be radically high – perhaps even higher than in developed markets.
The key to success in these markets, however, and in applying the concept of inclusive growth to fintech, is gaining trust.
Know Thy Customer
When it comes to the long-term effects of inclusive fintech, there are two overarching areas of concern. The first is gaining access to previously excluded people, and the second has to do with pricing and the quality of service. M-Pesa, for example, solved the problem of high costs and time of delivery, but it didn’t necessarily increase access - there were incumbent solutions in the form of on-bus transfers, though unsophisticated, risky and costly...
The only way for fintech players to solve the problems of both access and price is to better understand their markets and essentially get under the skin of their customers. While there is a perception that fintech startups are entering a ‘blank space’ in developing regions, this is not entirely accurate. People may already have services and technology available to them, but they don’t necessarily trust them.
Making it Stick
This is why it is critical for fintech players to consider their markets far more closely. As with people, every market has its preferences, prejudices, quirks and habits. New entrants need to understand these things in order to tailor products and services and ultimately make them stick.
Kenya’s Chamasoft, for example, leveraged traditional savings mechanisms to build its platform, and ensured that its group savings schemes mirrored what its market was already familiar with. In other words, the company pieced together new technology that still provided something recognisable for its customers.
Another great example of an inclusive fintech platform (using trust as a differentiator) is Livestock Wealth. The founder identified a long-standing tradition and means of wealth creation, and created a fintech savings product written in the language of pastoral wealth recognition. So although it is an entirely new product and platform, the concept is still recognisable – and hence trustworthy – in the eyes of the market it is serving.
As fintech matures and becomes an accepted and necessary part of global financial services, it will become increasingly important to gain the trust and loyalty of customers in new markets. It is only by first and foremost respecting – and then understanding – the needs of each market, that this trust be gained.
Vahid will be attending the MasterCard Foundation Symposium on Financial Inclusion in Kigali, Rwanda from 20 - 21 October. If you wish to meet with him during this time, please contact Kim at email@example.com.
Vahid Monadjem is the founder and CEO of Nomanini, a South African-based payments platform provider that enables transactions in the cash-based informal retail sector. He is a trained engineer with extensive innovation and product design experience.
Before founding Nomanini, he was McKinsey & Company’s Global fellow for emerging market product development. He has worked in Africa, South East Asia, North America and Europe within a wide range of industries, including, technical services, design, consumer goods, state-owned utilities, petrochemicals and telecommunications.
Based in Cape Town, Vahid regularly travels around the world meeting partners and scoping out new opportunities to introduce Nomanini’s payments platform to enterprises servicing cash-based informal markets.
Nomanini provides affordable access to payments for everyone, everywhere.
The company is a South African-based payments platform provider that enables transactions in the cash-based informal retail sector.
With its end-to-end platform designed for informal market environments, merchant aggregators are able to bolster their distribution channels, add to their portfolio of transaction services, increase their access to informal market consumers and efficiently monitor micropayments and services via a scalable cloud-based platform.
Nomanini, meaning ‘Anytime’ in siSwati has Pan-African partnerships enabling thousands of merchants to supplement their income, and to date, has processed over 16 million transactions.
For more information about Nomanini and our products, visit nomanini.com
As the pioneering fintech platform for the informal retail ecosystem, Nomanini connects merchants and distributors to each other and global service providers, integrating payments, working capital, and data analytics to unlock the latent potential of Africa’s economy.
Nomanini turns any mobile device into a retail point-of-sale solution for informal merchants that is connected to an interoperable merchant wallet. The interoperable merchant wallet allows merchants to offer a broad range of digital banking (including cash-in/cash-out), mobile, utility and entertainment services to their customers boosting competitiveness. In turn, digital service providers rapidly increase the scale and reach of their offerings. By generating real-time insights based on transaction data, distributors using the platform gain a single view of their merchant network, ensuring inventory is where it is needed most to improve sales. Distributors can also begin to accept payments for goods electronically, eliminating the risk and inefficiency of collecting cash. With data analytics, Nomanini helps extend working capital loans to merchants via distributors allowing them to invest in inventory to grow their businesses. The increased volume of goods and services set against reduced operational friction increases the profits for all platform participants.
Nomanini was founded in 2010 and is headquartered in South Africa.
For more information, please visit https://www.nomanini.com