 |
| Fintech |
If there’s one area that a
lot of people agree has the potential to impact a lot of Nigerians; it’s
Fintech. While there’s no universally accepted definition for Fintech;
its acknowledged to cover tech startups focused on mobile money,
payments, money transfers, loans, fundraising etc.
Currently in Nigeria for
various well documented reasons, a lot of people are excluded from
financial services. According to the last EFinA access to financial services survey,
39.5% of the adult population were financially excluded. And only 36.3%
of the same adult population were banked! In other words, the impact of
technology here will go far beyond buzzwords (like ‘disruptive innovation’), to providing real value which unlocks opportunity for millions of people. It’s that important.
Some disclosures are in order
here; Firstly, I’ve got vested interest in the success of Fintech. In
the past, I’ve written about how payments needs a saviour. This was a snapshot of my frustrations as a co-founder ofPrognoStore
where I’ve had first hand experience of the inadequacy in our payments
‘system’. So I’m rooting for Fintech startups to flourish and fulfill
their potential, as my firm and customers benefits.
Secondly, I’ve also worked in
regulatory finance space in a few banks over the last couple of years,
including Morgan Stanley and Credit Suisse. So while I wouldn’t consider
myself an expert on anything, I do think I’ve been able to pick up a
thing or two of how things work. Or how not to do things.
However this post is coming
solely from my perspective as a customer. I’m just an ordinary citizen
who would like to see changes and improvements, beyond what the old
guards (Banks, Interswitch etc) have offered us till date.
So to all Fintech startups out there; here are my suggestions as a potential user of your service.
Ability to use my Data
Let
my data work for me. As a customer, I should be able to connect my data
to other third party providers. I should be allowed to have some level of control over my financial information and decide how it will be used and by whom.
To summarize; there should be
portability of data. So If I’m curious and want to analyse my monthly
spending, I should be able to connect it toCruncher to do so. Or if I run a small business and want to link my account at PrognoStore, make it happen so there’s no need for unnecessary reconciliation. Or maybe I’m an eCommerce startup that needs to analyse my data in-house, I should be provided the flexibility to do so.
The key point here is that
there are so many use cases for my data, so it’s absolutely pointless
locking this up in your silo. Set it free so it can work for me. And as
we have more startups doing fairly new things like Pay With Capture (mobile money), Nairex (Bitcoin) or even long term players likePaga, the importance of having this data will only increase.
What to do?
The best way to provide for
this is to open up your API and actively encourage other firms to
integrate. Also look to UK, Australia and New Zealand fintech scene
where they’re doing some ambitious things.
Remember to play nicely with
other startups. Yes, think platforms andcollaborations but not ‘walled gardens’.
Finance
We all
know our banks don’t loan money. And when they do, you get exorbitant
fees, outrageous terms and tedious processes. Of course not every
startup in the fintech space is focused on making loans (or in a
position to do so). There’s also the issue of rule of law in Nigeria
with our weak institutions (e.g. courts, police etc) which makes
enforcement difficult if loans are in default.
Despite the glaring challenges, a few startups have taken the bold step and are indeed tackling this area like Aella credit and One-Credit. But in a country of over 120million, surely we need more to step up.
What to do?
Really get to know your customer.
Get real data (ditch reliance on paper documents like CoU) so you can
better accurately predict behavior, ability to pay and gauge credit
worthiness. Think big data (stuff like AI, Machine learning, data miming
etc) from day 1. Also leverage off 3rd party providers (point 1) e.g
credit rating agencies for better insights.
Features to bridge the gap
Frankly,
the old firms have made life easy for Fintech startups. They left so
many areas neglected and customers like me completely ignored and
unloved. For instance, look at the shambles that lack of recurring
payments wretched on the economy. This is just one example of how the
old guards have failed.
Now we have startups like PayStack and SlushPay
stepping in to bridge the gap. But there’s still so much that can be
done to bring a first class financial services experience to the reach
of many Nigerians. There is more opportunity to do clever things with
specific national developments like BVN, capability in new technology
like mobile usage and face recognition, cultural preferences Esusu/Ajo
or peer to peer lending etc.
What to do?
This is one area that is good to copy. Look at new age fintech firms like Atom Bank (mobile only bank), Affirm (online purchases with instalment payments) etc to see areas where fin
Privacy and Security
Okay, this applies to all
startups.Why? Because this is one thing that all startups start at from
point zero. You don’t suddenly have privacy andsecurity
figured out of the box. So who in your firm/world knows what article I
read, music I listened to, video I watched, hotel I booked into etc. The
point is, there’s so much information that we all unwillingly provide
to startups by using their products or services.
However for Fintech startups,
this has even more significance as you’re likely dealing with money.
This means you’re dealing directly with people’s source of livelihood
and this responsibility is one that you should rightly hold in the
highest regards. I understand ‘move fast and break things’. But this is
my money we’re talking about here…don’t move so fast you actually lose
it! The 4 key questions of particular interest are:
Privacy
1. Who in your firm has access to all my private data?
2. Who do you share my data with outside your firm and for what purposes?
Security
1. Is my money safe? Who guarantees it if something happens to your firm (after all you’re a startup).
2. Is your firm reasonable secured? All the big firms get hacked all the time so I understand there’s no 100% security.
For example, I like what piggybank.ng
offers as it’s a commendable new service to help one save (don’t we all
struggle to save!). But what I don’t like is that I check their website
and leave with more questions than answers.
What to do?
Think ‘Chinese wall’
from the day 1. Does everyone need the same access to all data? Cover
all the security basics like appropriate DDoS solutions, PCI compliance,
zero tolerance non compliance, etc. for then get a security consultant
to look over your processes. It’s that serious. Also strongly recommend
you check out Simple FAQ which provides a good gauge of trulylikely questions a user may have about a service and startup they’ve not heard of.
In all, I’m quite
positive about the recent developments. Fintech is indeed one of the
ways that technology can be used to open the doors of more prosperity
for our great nation. There’s so much that can be done in this space,
which can lead to better outcomes for everyone. Only if done properly.
Ade Olabode is
the co-founder of PrognoStore, a Point-of-Sale, Inventory and Analytics
software for small businesses. He tweets at @PapaOlabode
Comments
Post a Comment