Abstract – I want to make disclaimer at very beginning of this post that, I am not judging or rating any one neither my intensions are to compare anything/anyone here. This article is neither a conclusion nor a claim by any means this is just an assumption and current picture focused on African markets. Idea for this write up is to explorer, read, enjoy, deliberate and put suggestions or new thoughts/ideas on table off-course comments in agreement/disagreement are welcome. The evolution of financial systems has been a long but interesting journey characterised by sudden changes in underlying technology. Retail banking in Africa is far from where it should have been never followed the natural progression. Financial payments and banking started in a very inefficient and traditional way which was slow but still acceptable to the customers due to the stage in the information age.
Introduction – After spending 7 years in sort of fintech industry (I guess its ok for me to say sort of fintech if not fintech) I am now force to think my self whats next for me and what are options on table. Every day we hear about new startup and 70% chances its a fintech popup. I have met people who says they are working in fintech domain from last 30 years, 20 years or 15 years etc. This makes me to think again where this is going. Every area of financial services is undergoing disruptive change and the alternative finance market is producing a myriad of new and totally innovative business models. There seems to be no end to the wave of change sweeping through this industry. The prospect of having to spend real money focuses the mind like nothing else. I red this some time back on internet some where “There is no teacher like the market and no purifier of ideas like capital”. Alternative finance providers don’t necessarily have to be start-ups. Financial services employees are seeking more rewarding careers and want the ability to make a genuine difference.
Main story – The way I see and can test the real value (Not in terms of money) of any startups in Fintech domain is to try and sell fintech not the finished product. Learning which will come by selling is the only true feedback you can ever get on how your fintech startup is doing or going to do. All learning comes from street but very difficult to digest the feedback which any one can get on the street. Build a product or a service or an idea quickly and see if someone will pay for it will actually tell you what impact your product will make on people live, how much social good or impact it will make, what benefits will it bring to the table, what segment will be benefitted with it. If you are unable to sell, most likely you are an armchair thought leader and you should quit/change your immediate plans to give time and refinement otherwise the world of fintech that’s about to run scary and painful for those lot of startups that have popped without any real skill or team. Its just a thought from my mind and a very wild idea.
Now if we see the what benefits new fintech companies are brining which can cause social impact in real good sense are not too many but every one wants to open fintech startups.. Even huge non-financial players which are there from decades in market have begun to explore the opportunity to disrupt financial services (Banking Services (Not banks), Insurance Services, online selling or ecommerce services etc). One of the big player in online business have recently announced an online lending capability geared towards selected businesses trading their good on online retail platform. In fact banks face a huge threat from large technology players, simply because consumers now trust their technology providers, like Google and Amazon, more than they trust their financial services providers. Technological innovation allow alternative finance players to do thing better, cheaper, and faster.
While working in Fintech I got one thing which is very beautiful “friendship of incredibly cool people”. Some of the most original and creative minds from big banks and startups alike make for amazing company and conversations. The commonality in most of the disruption taking place in financial serviced is a direct result of technological innovation. Thus the term “FinTech” was coined – it refers to technology led financial services. Especially since I straddle the worlds of necessary (regulation) and possible (fintech), mixing with the fintech-ers provides a different and valuable perspective about the future of financial services, and a lot of hope that the financial industry is not yet all about documentation and fine-prevention. However, even though the market is ripe for startups, it has challenges which must be approached armed with knowledge and proper planning. Financial services is highly regulated, and launching in the wrong way can not only adverse financial consequences, but also personal liability for the founders and directors. This is because they could inadvertently end up breaching some regulatory requirements. So treating it carefully and seeking professional advice is very important.
Financial services like payments, investments, remittances, crowdfunding, consumer banking (Not Bank), Insurance, ecommerce, lending, Investment platform, investment data & strategies, acquired capital, money management and budgeting platforms, debit & credit cards, prepaid debit card and mobile banking service, stock trading service, social network for investors and traders, digital wallet for payments and remittances, mobile apps are just a handful of disruptive fintech market. With mobile, the financial services industry is becoming increasingly decentralized, increasingly tailored for specific needs, and more widely accessible. Indeed, nearly 75% of them say mobile payments/banking/money is important. Some of the best and hot selling examples of the Fintech industry from our earlier examples are as below and their business models include the following:
- Market place lending, including peer-to-peer and peer-to-business lending;
- Equity crowdfunding;
- Alternative forms of invoice or real estate financing;
- Payments systems;
- Disruptive insurance;
- Foreign exchange and other forms of remittance business;
- Providing innovative software to established banks and other financial services firms to deal with risk and regulation; or
- Developing an innovative platform for wealth management or trading.
New entrants are flocking to this market because its now accessible to any entrepreneur or even employees who want to become financial services entrepreneurs on top of this availability of raw materiel like cheap or almost free capital and other resource. There are hundreds of new start-ups emerging in alternative finance, across the globe every, and one would be forgiven for thinking this is the next gold rush. It may well be, because there are not many industry’s growing at close to 200% per annum.
Conclusions: Running on unknown path without roadmap or direction with due respect running like a headless chicken often result in disasters. I personally have seen and taken part in programs to build my experience or hands on mastery in such situations where Mobile Payments or Mobile Wallet based Cross Border remittances support country economy and proven in 100% confidence level that when it came to the crunch, many countries including Greece, Cyprus & Italy had no choice but to accept rescue terms that affected not only bank bondholders and shareholders – but many thousands of private deposit holders. Their cash or savings were simply scalped and went to help fund the closure of one bank and the propping up of others. Opportunities are countless; one who seizes them first gets the upper hand. Thanks to regulation and central bank support through the Ministry of Innovation.
Get up, spread your wings and grab as much sky (I guess there is no more land left) as you can. While a good chunk of consumers – don’t carry cash, I bet they will be wearing a smartwatch. After a long run, they may want to pay for a refreshing juice with the same wristwatch that tracked their route. One day, not far from today, they may transfer money to their own college-aged children, or rebalance their investment portfolios, with just a few flicks of their wrists. Will real fintech tools end up on our wrists? Maybe. No doubt this is an exciting time for the entrepreneur in the financial services industry.
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