This article was written by Ade Olabode, and was first published on his Medium page.
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’.
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?
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:
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?
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