Financial Inclusion

Social Good and Another Fintech

Social Good – I want to make disclaimer at beginning of this post that, I am not judging or rating any one neither my intentions are to compare anything/anyone here. This article is neither a conclusion nor a claim by any means this is just my own Intuitive writeup and assumption. The focus here is on  African markets.

 

Lets Paint the Picture on FinTech Market

This is depicting whats happening around and to explorer, read, enjoy, deliberate and put suggestions or new thoughts/ideas on table. Please comment in comment section below. All agreements/disagreements are welcome.

The evolution of financial systems is happening since centuries. The journey of FinTech is interesting and challenging at the same time.

Financial Technology disrupted banks business with sudden changes in underlying technology and business strategy. FinTech golden idea “You grow then I grow”; almost killed banks banking style.

Emerging technologies like AI, Machine Learning and Data Science helped FinTech in gaining the banking space here. Systems & strategies based on these technologies showed the world the power of  prescriptive, predictive and descriptive analytics. How these analytics have changed FinTech space completely. Banking and financial services institutes are now becoming Big Data producing factories.

Retail banking in Africa is far from where it should be; never followed the natural progression. Financial payments through banking sector started in a very inefficient and traditional way. It was slow but still acceptable then sadly not any longer. Customer looks for speed, low cost, least KYC and highly efficient systems in this information age.

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FinTech and FinTech Industry Age

After spending 7 years in sort of FinTech industry;  I am now forced to think my self whats next for me if not banking on emerging technologies to strengthen . the FinTech’;s Banking industry. New startup in FinTech popping up on almost everyday.  Though we are living in FinTech 3.5 version time but still it has huge potential to grow.

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.

IoTThe way I see and can test the real value (Not in terms of money) of any startups in FinTech domain is to try to sell their FinTech startup as a product. Learning which will come by selling is the only true feedback you can ever get on how your 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.

 

Digital Transformation of Financial Services

Digital transformation of financial services into Financial Technology has given millions of opportunities and startups to this world. Banks still thinking what to do. Allow me to warn; FinTech is not just about giving new innovative services in financial services domain but also making easy what we have already.

FinTech’s which came up w without any real skill or business plan, will survive in ICU before gets written in history books.

Most of the startups in this space came up huge experience out side of financial services domain. How they will transform and make it digital; lets wait and watch. Opportunity has been seen and actions have begun to explore the opportunity to disrupt financial services (Banking Services (Not banks), Insurance Services, online selling or e-commerce 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.

 

Market and People in FinTech

While working in FinTech I got one thing to believe and its which beautiful as well “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. Since I straddle the worlds of necessary (regulation) and possible (fintech), mixing with the fintech-ers provides a different and valuable perspective. It all about the future of financial services, and 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 are 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, e-commerce, 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.

 

Blockchain & FinTech

With mobile, the financial services industry is becoming increasingly decentralized (Blockchain coming in), 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 it’s 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.

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.

 

Sign-tConclusions: Running on unknown path without roadmap or direction with due respect running like a headless chicken often result in disasters. I 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.

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