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HOW FINTECH IS DISRUPTING BANKING SYSTEMS IN AFRICA

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The need for African banks to innovate at a quicker pace and access new customer segments is behind the increasing number of financial institutions partnering with or investing in fintech startups.

“It used to be quite simple. Customers arrived at banks through the revolving doors and opened accounts or applied for lending in-store. Banks owned the customer relationship by default and ‘see my bank manager’ was a common term,” says Mark Fitzgerald, Director – Government and Enterprise at FaceMe

Fast forward, and technology has altered the way in which business communicates with consumer. The new customer landscape, along with today’s technology, pose notable threats that outweigh the former challenges wrought by Web 1.0. What happens when a third-party website aggregates the best deals on current accounts for the consumer, much like the ‘get ten instant quotes’ websites that disrupted insurance – whose customer are they? What happens when that aggregation service is an app – does the owner of the app get a sliver of the relationship pie too? And then there’s what Forrester calls Amazon’s customer relationship ecosphere around tens of millions of customers. The group warns CMOs to learn from and even imitate Amazon, but to “stay tethered to their consumers as Amazon envelops their shared customers in a cozy cocoon that will influence their use of every possible service.”

fintech in AFrica

Picture from Nash Tech

In today’s banking environment, connection is up for grabs – but when owning the customer relationship is anyone’s game, how can banks make sure it’s theirs?

Fintech, meet banking
Investment in fintech sector is seen as an investment hot ticket. While the 2015 edition of the EY FinTech Adoption Index estimated that fintech was still in its infancy, the 2017 edition found that adoption had risen dramatically to one in three. “But while it’s clear that digital start-ups and first round investments in fintech are growing and that the digital revolution in banking is well and truly here, what hasn’t yet been mapped is the impacts on banking’s biggest players,” says Fitzgerald.

Read Also: Diamond Bank Launches Artificial Intelligence — Game Changer For Our Banking Systems

Disrupting BAU
In its report, Banking disrupted, Deloitte suggests that the future of European retail banks is looking rather grim. Rocked by the wake of the financial crisis and the ongoing shakings of re-regulation, retail bankers face the threat of today’s “de-banked consumer”. Open Banking in England is demanding that Britain’s nine biggest banks crack open their customer data to third parties upon customer consent, with the aim of improving price comparison and boosting account switching.

Through platforms like WhatsApp, cash can be transferred by way of instant message (as opposed to the multi-layered authentication process required by your bank app.) Beyond financial transactions, Open Banking will integrate services from third parties, allowing lifestyle choices to be made quicker and easier – for example, the same interface will help you find and finance a new car.
The new breed of customer

“In short, the silos of traditional retail banking are coming down, giving way to a more personalised and self-regulated form of financial management. Today’s customers expect to engage directly and immediately with their retailers. Needs are not only to be met, but to be anticipated before they arise, and service must be a fluid, intuitive and integrated extension of their lifestyle,” says Fitzgerald.

Previously banks were able to make small, incremental changes to meet the first internet-based challenges. But today’s ongoing digital disruption and re-regulation offer a tsunami of change that has chipped away at the competitive advantage banks used to enjoy. Deloitte believes the challenge “is not that any single new entrant or model will emerge to dominate their market. Rather, the risk is that the combination of attackers across the banks’ eco-system will steadily erode their core competitive advantage, resulting in a much smaller banking sector.”

Fighting back
If banks want to win the game, they’ll have to win the customer relationship. If they don’t own that relational space, someone else will.

“FaceMe encourages banks to take a few steps back – enough time to extract themselves from the hamster wheel of optimising short-term profitability – to consider a longer-term vision that can buffer future uncertainty and innovation,” he cautions.

The future of banking is cryptic, and fintech is rewriting the rules as we go. But the more we can capture the unchanging power of human relationships and prize the customer experience, the greater chance we have to outwit disruption.

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Afro Success Stories

African Entrepreneurs creating Jobs and Employment in Their Communities – Olasupo Abideen

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Olasupo Abideen ” My greatest achievement is being a 25yr old employer who employs 35 people and has trained 475 Others” as one of african entrepreneurs.

Meet Olasupo

I am a 25year old one of Nigerian african entrepreneurs, founder/CEO of OPAB Gas with over 6 years of transnational experience leading and working with diverse teams to facilitate youth empowerment, development projects and youth involvement in policy. I am a UNESCO ESD Young Leader, a WEF Global Shaper and a Fellow, Young Africa Leadership Initiative.

Since receiving the $5000 Seed Capital in December 2018, my Company has created employment for thirty-five (35) University undergraduates (through our Work Student and Student Ambassadorship Program), opened ‘four (4) new Gas stores’, and trained ‘four hundred and seventy-five (475) unemployed youth and corps members‘ (through our #Gasprenuer Initiative). As a means of giving back to the community, we have also helped ‘five (5) kids’ return to school through our #StreetToSchool programme for our Community.

My Humble Beginnings

I watched my mother walk long distances to gather firewood and buy coal to cook for my family in my growing up years in my village in south-west Nigeria, where I was raised. It wasn’t peculiar to my mother; this was commonplace for all families. We all knew it wasn’t safe. We knew that if it made them this uncomfortable, there was no way it was safe, but we didn’t know there were alternatives. After all, this is how our grandparents and their parents before them lived.

It bothered me to see my mother’s red eyes, and the wet eyes of other women in our rural community bothered me a lot. Even though I did not know until recently that cooking with firewood is equivalent to smoking 400 cigarettes per hour, and is one of the three causes of mortality among women and children, I knew there had to be something I could do, but I couldn’t figure it out; or better put, I did not have enough education nor access to information to figure it out.

 

My Business Idea

The Idea to start my business came from a need that I identified and solving that problem meant a business opportunity. As a student of chemistry at the University of Ilorin, I was exposed – through volunteering – to MDGs (and subsequently SDGs), and I took a keen interest in clean, renewable energy, that could be used instead of orthodox fuelling options, and one of them was Liquefied Petroleum Gas.

After a long time of advocacy for SDGs, as an undergraduate, my SDGs advocacy and youth development organization, Brain Builders International, signed an agreement with the Kwara State University’s Community Development and Entrepreneurship Centre to train young Nigerians african entrepreneurs on the Sustainable Development Goals, their benefits, and ways toward actualisation.

I noticed that every time I took the 55min trip to Kwara State University to facilitate these training sessions, I would encounter students carrying gas cylinders: either going to fill Gas in Ilorin or coming back from Ilorin after filling Gas. I later learnt that the only cooking gas supplier in the community at that time was exploiting the students by using a manual scale that could be manipulated and also selling at a rip-off price.

 

Solving the Problem

In 2017, I took a soft loan from a friend, added some of my own moneyand after conducting intense market research, filing necessary papers, and satisfying ethical and professional standards, we opened our first OPAB Gas station. The services we offered hinged on three things; convenience, safety, and trust. Students could now focus on academics, as we did not only sell gas at the standard rate, but we also offered pick-up and delivery services. We used safe measures alongside a digital scale to address the issue of trust. Within three months we had broken even.

The TEF Intervention

In 2018, I applied for the Tony Elumelu Foundation Entrepreneurship Programme but was only selected for the GIZ list to be one of the 210 beneficiaries of the training and $5000 funding. The training provided by the foundation on business planning, financial intelligence, scalability, among others could only be likened to a mini MBA.

Immediately after the training myself and my team we started discussing how to dominate the market in which we operate and capture new markets.

With the seed capital, we were able to expand our business.

 

Our Growth and Milestones as one of african entrepreneurs

  • Expansion: We have expanded the business to 6 stations in two townships to target the student populations and made over $25,000 since receiving the seed capital from the foundation.
  • Employment: Staff strength – 2 (in 2017), 35 people (2019).
  • Gas on Wheels: We now own delivery vans and offers delivery services
  • Digitization: We now take orders on the business’ website in both cities where we operate.
  • Introduced Customer Loyalty service
    • Health safety card – to educate users about safety measures.
    • Customer reward: Points reward system.
    • Holiday Promos
  • we also have a few impact initiatives that we run.
  • OPAB Gas has trained 450 Youth Corps members, unemployed youth in Kwara State on the economic merits of the Gas economy and the many opportunities that abound in the sector.
  • In line with the UN SDGs, OPAB student work experience – an internship programme where we train students. During this internship, they work on Sundays for a stipend. They then receive N10,000 for every 1000kg of gas sold.
  • OPAB gas student ambassador scheme – delivery service.

 

The Future

The vision for OPAB Gas has always been to solve energy availability and ease of use for everyone across Nigeria so we are constantly working on ways to reach out to more Nigerians.

Our OPAB telemetry solution will allow people to monitor and manage their gas usage, notify them when it is almost finished, connect them to the nearest gas stations and pay for gas with existing mobile money applications.

 

 

Contact Details

Website: https://opabgas.com

Instagram: @opabgas_

Phone call/WhatsApp: 07068775529.

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