A conversation with Tendai Mugovi, co-founder of Zimbabwean fintech startup Cashliq which offers banking as-a-service products. He speaks on the origins of the startup, challenges they have faced in its operations and how they have working their way through the challenges.
Cashlinq is a Zimbabwean fintech startup that offers core banking services to banks and other financial institutions including telcos. The startup hopes that by offering such services, it help facilitate financial inclusion across the country as well as its other markets which include Zambia.
TechCabal caught up with Tendai Mugovi, co-founder of Cashlinq, to learn more about its product offering, challenges it has faced, as well as future growth ambitions.
Tell us about Cashlinq and the problem the startup is trying to solve.
Tendai Mugovi: The idea for Cashliq started when I and two other co-founders were working as management consultants with one of the leading consultancy firms in the country. We were doing consultancy work around digital transformation products, and go-to-market strategies around those.
While working there, the main challenge was having to come up with a brilliant project idea, seeing it approved by the board and then seeing it falter at the implementation stage. Reasons for them not being implemented were mostly around the fact that the core banking systems were either too expensive to use or the infrastructure did not really support the project.
After seeing this problem across the board in the banking sector, not only with local banks but also international ones, we realised that it was worth trying to solve. We then came together to build a core banking platform from the ground up. In short, Cashlinq aims to provide African financial institutions with a flexible and affordable banking solution so that they address the unique opportunities and challenges in our continent.
Explain exactly how Cashlinq works.
TM: It is a suite of applications and currently, we have about 18 modules. So we have core banking which comprises web-based and cloud-based applications. This is the application where your account and wallets sit. It does all your bookkeeping and integration with the national banking systems so that wallet holders can be able to send and receive money and also do bill payments. We also have channel applications where we have internet banking, mobile banking as well as USSD and WhatsApp applications. Basically, it’s a suite of web and mobile applications that are used to run like a digital bank.
What challenges have you faced in trying to solve this problem?
TM: I think the main challenge has been proving ourselves. The organisations were are trying to service are big with billions of dollars in revenue so as a fairly small outfit, having them trust us is a big ask. But we have been adding more clients so thats great, though that barrier to entry still exists.
Our product is a core banking application which is the backbone of any financial institution soo because of that, there is obviously a lot of due diligence needed before you can onboard a new service. How we’ve been traversing it is that with our first client, which happened to be a mobile network operator, we initially offered a free trial because we were quite confident that if they genuinely wanted a solution, ours was that.
So we had them run our solution for two months and that trial was successful because we went on to sign contracts with them. Additionally, we have also been pushing for media coverage so we can build strong brand equity and I think that has also gone a long way in helping us establish ourselves.
How much traction has Cashlinq garnered so far?
TM: We are now operational in Zimbabwe and Zambia and will soon deploy our solution in Mozambique and Malawi. This is actually by extension of one of our Zambian clients who is also present in those countries. In terms of client base, we currently have four onboarded including one of the three telcos in Zimbabwe. We also have two banks onboarded. In Zambia, we have a neobank that we are also working with. We also have two pilots with one of the biggest brands here in Zim for a new wallet.
What role is Cashlinq playing in trying to facilitate access to financial services not only in Zimbabwe but also in other markets?
TM: I think in many of these markets, there are a lot of economic fundamentals that are not in place. This means that if core banking services are not available, then the main business of banking is also not available. In our markets, banks normally work by getting deposits, investing them in the market, giving out loans and getting interest from those. They also charge transaction fees. But in other countries like New Zealand, there are zero transaction fees, which is impossible in an economy like ours because the only avenue for banks to make money is to charge transaction fees which have become high as the cost of doing business goes up.
That further demotivates people from getting into the financial system, to begin with. So with our solution, knowing the fundamentals of the market and being very open in terms of our pricing modules, I think we offer relatively affordable services compared to what’s on the market. We are providing an opportunity for banks to include a lot of people who wouldn’t otherwise afford banking services.
Also with our modules, banks can pick and choose what they want to pay for. For example, a bank can pay for our remittance banking module and not an agent banking module. That flexibility saves them a lot because they don’t have to pay for services they are not going to use. It allows them to be more innovative to the realities of the market.
What’s next for Cashlinq?
TM: We definitely want to scale across many African countries and that’s going to require some fundraising so that’s what we want to work on next.
Editor’s note: Interview has been edited for clarity.