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1. Millennials squared – a parable of a digital wallet and beer moneyEarlier this year Sam Crowder stood up at a televised baseball game, and held a sign asking his Mum to send him “beer money”. He included his Venmo account information. Thousands of people sent him money, as his sign went viral. Beyond sharing this story as advice in case you ́re ever thirsty and leave your wallet at home, what it reflects is how the use of new technologies may start with digital natives, but then rapidly spread to other generations. It reflects the inter-generational adoption of, and use of, FinTech technologies.So, when looking at the potential of new services, it is important not just to consider the young people who will adopt it. But what will happen when they introduce the technology to their friends and family. Millennials are the earthquake that shakes companies, and adopt new tech and services at lightning speed. The rest of us are the tsunami of adoption that follows and lead to exponential growth.

2. Facebook, Amazon, Google or Ant Financial will become the largest retail bank in the worldIt’s 2020 and to apply for a loan, instead of going to your local bank branch, you quickly ask Facebook for approval. This is far from fanciful thinking. Even as of today, PayPal is arguably one of the largest retail banks — it has more money in deposits than all but the largest 20 US banks, and offers services from payments, to loans and credit cards (albeit currently via partners). But we believe that one of the major tech companies, whether that is Facebook, Amazon, Google, or Ant Financial (the financial arm of Alibaba) will not only transform retail banking, but rapidly become the largest retail bank in the world.“Some bankers and analyststhink that Google, Facebook, Amazon or the like will not fully enter a highly regulated, low-margin business such as banking. I disagree. What is more, I think banks that are not prepared for such new competitors face certain death”Francisco González, CEO, BBVA

hese major tech companies have the platform and the scale to upend retail banking. They already have a digital wallet which underlies the services that enable users to buy and sell on their platforms, such as Google Wallet and Amazon Payments. Facebook Messenger Pay is already available in the US while it recently received an e-money license from the Central Bank of Ireland. This means European users will be able to store and transfer money, and make online purchases. The transition to becoming the largest retail bank in the world will be swift and brutal for traditional banks.

So far JUMO has analysed more than 33 terabytes of data to serve more than nine million customers in seven countries across Africa and Asia, including Tanzania, Kenya, Uganda, Ghana, Zambia and Pakistan.

Its mission is to build and operate inclusive digital banking marketplaces to advance financial inclusion for the 80 per cent of the world’s population who are excluded or underserved by traditional financial services.

As an investor partner, LeapFrog’s financial services expertise is being used for product design and multi-country rollouts, to turbocharge Jumo’s growth and spur financial inclusion across Africa.

Nigerian fintech firm Carbon — an early-stage financial services startup based in Lagos — has posted on its website financials audited by KPMG.This comes four months after the company obtained a credit rating as a pre-IPO venture. Carbon — which recently rebranded its OneFi holding company and PayLater product titles into one name — plans to continue releasing its financial results on an annual basis, co-founder and CEO Chijioke Dozie told TechCrunch.This may not be totally unheard of in other global tech markets, but for startups in Africa’s big tech hubs — such as Nigeria — it’s a rarity.One of the first glimpses into startup financials in Nigeria came when Jumia shareholder Rocket Internet went public in 2014, which required it to include limited Jumia data in its annual report. The accompanying prospectus to Jumia’s listing this year on the New York Stock Exchange offered the most expansive financial data to date on a tech venture operating in Africa.Prior to this — and still for the most part — companies in the continent’s (mostly) pre-public (earlier-stage) startup hubs — such as Nigeria — provide little to no financial performance info.“Typically, in the local market, we have not seen a lot of voluntary transparency or the availability of data,” said Lexi Novitske — a Lagos-based VC investor at Acuity Venture Partners.“Most startups are concerned such disclosure could expose losses, give market intel to competitors or attract unwanted attention from regulators. It could also lead to negative negotiation leverage if partners saw that they were making good returns.”So why’d Carbon go to the trouble of putting its pre-public accounting out in the open for anyone to see?

Clients and recruiting were two reasons. “From a customer perspective, we are trying to get people to trust us with their financial services…so they can see this is the institution I’m dealing with and this is their financial position,” explained Carbon’s Dozie.Carbon has evolved from its original focus as an online lender to offer a broader array of mobile-based financial services — including payments, investment products, credit reports and business banking services. In March, the company acquired Nigerian payment solutions company Amplify for an undisclosed amount.By stats offered by Briter Bridges and a 2018 WeeTracker survey, fintech now receives the bulk of VC capital and deal-flow to African startups, many of which are attempting to reach the continent’s large unbanked and underbanked populations.Carbon fits into that category and its CEO believes being upfront about the startup’s financial position will attract top talent. “From a recruitment perspective, we want recruits to know we have good prospects — that this is a company that’s doing well and wants to keep doing well,” said Dozie.That impression is buoyed by Carbon’s initial results, which were fairly positive for a Series A-stage startup. The company had revenues in 2018 of $10 million, according to its online annual report, and turned a profit of around $500,000.It’s helped with recruiting interest, according to Dozie, who said he’d marked an increase in candidates inquiring about open positions since the results were posted.

we don’t get considered because investors don’t really think that you can get the results or this performance in the markets that we’re in,” he added — noting that Carbon has operations in Nigeria, Ghana and South Africa and is considering expansion in Senegal, Côte d’Ivoire, DRC and Egypt.Investor Lexi Novitske thinks Carbon offering financial performance data is a good thing for Africa’s tech ecosystem. “The move builds trust from clients, partners or investors in a market where there is not a lot of openness,” she said. “I am encouraged to see how other companies will react. My hope is that more will openly report their own metrics…”Dozie says the company will continue to post audited financials on an annual basis, even if they show losses. If the startup continues to expand, attract capital and talent and grow revenues, other Nigerian fintech firms may follow suit.

Financial-technology companies are changing the face of finance. Over the past ten years, what started mostly as disruption in the payments space has expanded to every corner of finance. Even areas once assumed to be safe are seeing new entrants and competitive threats. Wealth and asset management, wholesale banking, capital markets, regulation and risk (“regtech”), and trade finance are just the most recent areas to see innovation driven by small technology-first players.

Whether fintechs ultimately win or lose significant market share may be beside the point; they are redefining customer expectations and continue to create new business models. As fintechs are frequently building their entire technology stacks from the ground up, they are highlighting incumbent financial institutions’ weaknesses not only in digital user experiences but also in operational efficiency. Whether a new digital brokerage wins or loses may not matter when customer expectations around brokerage fees change. A retail foreign-exchange fintech having 5 or 50 percent of the market may matter less than retail FX margins disappearing for everyone. Whether the next crops of “neobanks” disrupt retail banking may be less important than their highlighting for users and customers the possibilities of a modern, digital-first experience.

f your downside potential from disruptive threats. Incumbents can choose to invest in companies they partner with or to focus on areas they know well or interesting adjacencies. We frequently advise clients to find ways of keeping corporate venture-capital groups slightly at arm’s length to attract skilled managers, and we recently have seen increased interest in investing in established outside managers who focus on financial technology. Transform yourself to be more like a fintech. Digital transformation is a difficult but necessary process for most incumbent financial institutions. Redesigning core infrastructure to be more modular and dynamic, driving a new agile operating model, and upgrading technology and workforce skills are all necessary to compete with outside threats, fintech and otherwise. Build your own (internal) fintech. The road for transformations is normally measured in years, but the competitive threat from fintechs is today. Increasingly, we are seeing financial institutions try to beat fintechs at their own game or self-disrupt areas of their business before others can. The key to success in new digital business building is to combine the agility, speed, and talent of a start-up with the “unfair advantage” of an incumbent by leveraging existing assets (e.g. customers, distribution, or infrastructure). Serve the fintechs. A few financial institutions can find their competitive advantage in creating scaled, efficient technology and operations to enable others to embed financial services in their customer experiences. This “banking as a service” business model depends on finding a profitable path to white labeling but draws on the inspiration of large tech platforms. Enabling the customer experiences of others has quickly moved beyond just enabling fintechs to also working with big technology companies, retailers, telecommunications companies, and beyond. Ignore fintechs. Although ignoring the competition is rarely the right choice, some businesses are built on moats—frequently regulatory—that are difficult to disrupt or they play within narrow markets. Companies should prioritize where they need to focus and in doing so know when they need to pay attention and when they need to avoid the distraction of disrupters.

M-Pesa is a virtual banking system that provides transaction services through a SIM card. Once the SIM has been inserted into the card slot of the mobile device, users can make payments and transfer money to vendors and family members with SMS messages. Users with no bank accounts can access the numerous M-Pesa outlets distributed across the country. The money that needs to be stored is given to the kiosk attendant, who transfers the amount in digital form to the user’s M-Pesa’s account. Cash collected from M-Pesa is deposited in bank accounts held by Safaricom. The bank accounts serve as regular checking accounts and are insured up to a maximum of 100,000 shillings (or $1000) by the Deposit Protection Fund. M-Pesa provides receipts as proof of transaction. For a transaction to take place, both parties have to exchange each other’s phone numbers because the phone numbers act as account numbers. After settlement, both parties receive an SMS notification with the full name of the counterparty and the amount of funds deposited or withdrawn from the user’s account. The mobile receipt, which is received within seconds, helps to promote transparency for all individuals involved in a transaction.

FinTechs and the Value Chains in the Financial IndustryIt is beneficial to remember how things worked before and after FinTechs and TechFins or big techs in the financial industry.Banking models are shifting significantly from a pipeline, vertical, paradigm, to modular solutions that pave the way to new banking paradigms that entail higher levels of openness toward third parties and a growing number of modular services bundled together.Value is created in platforms through economies of scope in production and innovation (Gawer, 2014). In order for platforms to work, adoption and network effects are essential. Models can go to mere compliance with the prescriptions of openness of PSD2, to the inclusion of new services, the opening of the banking core and data, and the aggregation of those within a platform experience. In particular, we assist both to the evolution of a Bank-as-a-Platform model and a tech-platform-driven model supporting banking and financial intermediation, which both constitute a new interesting field of analysis.Since the wave of digital transformation started entering the financial industr

, banking-as-a-business has started moving from a product/service perspective to more contextual solutions where providers are customer needs-driven. This is because customer-driven companies outperform the shareholder-driven ones, and this requires an outside-in approach.Having said that, it is beneficial to remember that digital transformation implies four main categories of innovation (product, process, organizational and business model) (Omarini, 2019, p. 340); all of them require rediscovering that a new strategy paradigm exists. This regards the concept of co-creation, and because of this no single firm can unilaterally carry out a process of continuous experimentation, risk reduction, time compression, and minimizing investment while maximizing market impact. Co-creation requires access to resources from extended networks (suppliers, partners, and consumer communities).Under these new market conditions, FinTechs have become an important piece of a bigger puzzle, each one in its own area of business (payment, lending, etc.), while at the beg

inning most of them started as mono-business companies. Only a few of them may become leaders in the market. On the one hand, there are those that make their strategy become international, and on the other, there are FinTechs which enlarge their services-scopes. However, the majority of them will become part of ecosystems where the direction could swing from banks to tech companies or to FinTechs as well, able to manage the network by developing kinds of conglomerate-as-a-service.Another interesting point to outline regards this recent period where all of us have experienced lockdowns around the world, and some effects have also impacted FinTechs as well. The valuations of most unicorns have crashed overnight, while on the FinTechs side there are different situations. Some of them have experienced a dramatic reduction in their

The probability that a customer would incur financial losses in financial transactions conducted using Fintech is referred to as financial risk particularly when these losses would have been avoided if the same transactions had been conducted on a conventional platform (Keong et al., 2020; Razzaque et al., 2020). Financial risk can also be incurred by the financial service provider thereby distorting the operating budget of the firm. An example of a financial loss according to Khalil and Alam (2020) is when the process of launching a Fintech service has taken a longer time than planned thereby translating to an increase in the total cost of implementation. The prevalence of financial risk has heightened due to the nature of digital technology employed by Fintech, which could lead to recurrence in financial losses driven by electronic fraud (e-fraud) (Keong et al., 2020). These authors also listed other causes or drivers of financial risk as factors related to budgetary exchange framework, currency misrepresentation, and additional exchange fees that accompany the preferred value. 

FarmDrive generates real-time credit reports for small farmers, allowing them to access loans from financial institutions and agricultural input providers via mobile phone. 

FarmDrive collects expense and revenue data from farmers via SMS and combines it with satellite imaging, remote sensing technology and alternative data points (e.g., soil analysis, weather forecasts) to create detailed yield estimates and assess credit risk.

JUMO offers a wide range of services to users in emerging markets via partnerships with other financial institutions

JUMO offers financial services infrastructure to third parties and has served over 15 million customers across countries, including Ghana, Kenya, Pakistan, and Tanzania, and it plans to use the fresh capital to launch new products and expand into new markets: It's set to launch in Bangladesh, India, Côte d'Ivoire, and Nigeria soon, per its website.

South African fintech JUMO scooped up $55 million in funding

Globally, two (2) billion people are unbanked, pushing them into extreme poverty and making them unable to manage financial emergencies. However, digital financial technologies present a unique opportunity to financially include the unbanked. Our mission is to leverage digital financial technologies to provide upward social mobility for the unbanked.

Our mission is to leverage digital financial technologies to provide upward social mobility for the unbanked.

BezoMoney is a fintech startup that provides digital financial products for the unbanked. Globally, two (2) billion people are unbanked, pushing them into extreme poverty and making them unable to manage financial emergencies. However, digital financial technologies present a unique opportunity to financially include the unbanked. Our mission is to leverage digital financial technologies to provide upward social mobility for the unbanked.

JUMO reaches 15 million customers across Africa and Asia

JUMO has disbursed over USD 1.6 billion in funding and is growing its base of savings products. “By empowering MSMEs, we’re also positively impacting communities, families and employees. Technology is removing barriers to financial inclusion making it possible to responsibly provide everyone with access to good financial choices,” Watkins-Ball added.

“We are working to connect every entrepreneur to the financial products they need to grow and prosper,” says Watkins-Ball. “Our technology enables our partner banks and payments companies to help millions of underserved people access financial services.”

The HiPipo chief executive officer Innocent Kawooya expressed his excitement about JUMO’s financial inclusion efforts, saying that its products are taking a lead in democratising lending and borrowing.“We are excited to interact with JUMO, a company that is enhancing financial inclusion in over 10 countries and serving more than 16 million customers.”

Reimagining finance in emerging markets by extending financial services to the underserved and the excluded has been JUMO’s goal since inception. This explains why it chose to specialize in social impact financial products where small businesses that are financially excluded can access loans and savings products.

Reimagining finance in emerging markets by extending financial services to the underserved and the excluded has been JUMO’s goal since inception.

We do this by crowdfunding loans and unlocking capital for the underserved, improving the quality and cost of financial services, and addressing the underlying barriers to financial access around the world. Through Kiva's work, students can pay for tuition, women can start businesses, farmers are able to invest in equipment and families can afford needed emergency care.

We do this by crowdfunding loans and unlocking capital for the underserved, improving the quality and cost of financial services, and addressing the underlying barriers to financial access around the world. Through Kiva's work, students can pay for tuition, women can start businesses, farmers are able to invest in equipment and families can afford needed emergency care.

We do this by crowdfunding loans and unlocking capital for the underserved, improving the quality and cost of financial services, and addressing the underlying barriers to financial access around the world. Through Kiva's work, students can pay for tuition, women can start businesses, farmers are able to invest in equipment and families can afford needed emergency care.

Lagos, Nigeria – Leading digital financial services company, Carbon, has released it’s 2019 financial statements audited by KPMG, detailing its product growth and $17.5mm in revenue.Carbon began operations in 2012 and within the space of six years, it grew revenue steadily, reaching an all-time high of $17.5mm in full-year 2019. In the same year, Carbon expanded its product offerings to the Kenyan market and it’s disbursement volumes have grown from N13bn (2018) to N23bn.Formerly called Paylater, Carbon pioneered instant lending in Nigeria and was the first mobile app to provide access to credit digitally and without requesting individuals to present the documents and collateral traditionally associated with accessing loans. Earlier this year, Carbon introduced its iOS app and USSD (*1303#) service. It also announced its Disrupt Fund, a $100,000 Pan-African fund to address the lack of capital for African tech startups.“The company will continue to share it’s audited financials annually, thus upholding a culture of transparency and accountability,” says Ngozi Dozie, Founder of Carbon.So far this year, Carbon has introduced multiple new features for its customer base including Carbon Express: a keyboard allowing users to make payments from any social app, periodic investments, free bank transfers, monthly wallet interest, and more.Carbon also plans to introduce debit cards, a reward program for loyal customers and SME accounts for entrepreneurs, in the months to come.You can find the full annual report here (https://bit.ly/2YNuvPw).About Carbon: Carbon (https://getCarbon.co) is a pan-African digital financial institution accessible via smartphones and which provides individuals with access to credit, a fee-free/interest-earning wallet, simple payments solutions, high-yield investment opportunities and easy-to-use tools for personal financial management.Our mission is to empower opportunity globally through friction-free finance that empowers individuals and businesses. We are a global company of over 100 employees with operations in Nigeria, England and Kenya.

Carbon began operations in 2012 and within the space of six years, it grew revenue steadily, reaching an all-time high of $17.5mm in full-year 2019. In the same year, Carbon expanded its product offerings to the Kenyan market and it’s disbursement volumes have grown from N13bn (2018) to N23bn.

Leading digital financial services company Carbon from Nigeria posted all-time high growth last year

Savings and investing is a critical part of building wealth and economic development, and Egypt’s youth needs a mobile-first platform like Thndr to open the floodgates of investing in the coming decades. Platforms like Thndr have seen great success in other markets across the world, and Thndr is built with keen attention to the local nuances and preferences of the Egyptian investor in mind.

Egyptian mobile investment app, Thndr has become the first brokerage firm to receive regulatory approval from the Financial Regulatory Association (FRA) in the last 12 years. The financial startup allows users to link their Egyptian bank account, and trade, invest, and profit from Egyptian stocks, bonds, and indices. The decision by FRA to give the startup regulatory approval comes after Egypt reforms its financial regulations on new companies with the recently approved Banking Act passed last month which allows more companies to become involved with financial trading and investment.

Before the passing of the Banking Act in July 2020, the only financial apps available for Egyptians were applications that helped you put aside money for saving. However, that is set to change as companies like Thndr take advantage of the new space given to financial technology companies to allow users to invest in the Egyptian stock exchange from their homes. Stock investment apps have become popular in the last few years as a way to not only save money but to make savings grow over time. While there is always risk involved with stock trading, Thndr hoping to provide users with education on how to invest in order to be more financial secure.

FarmDrive’s alternative credit risk assessment model is providing financial institutions with an agriculturally relevant and data-driven model to assess risk and develop loans that fit the needs of smallholder farmers. Not only will this solution unlock millions of dollars of previously risk-averse capital for smallholder farmers, it will improve the livelihoods of entire communities, thereby alleviating poverty, hunger, and inequalities.

Nearly 50 million smallholder farmers in Africa are struggling to support their families and communities through agri-business because less than 10% have their economic needs met by the financial sector. Without access to credit, they remain unable to purchase quality inputs, make productive investments, and improve their production and harvests.

FarmDrive’s alternative credit risk assessment model is providing financial institutions with an agriculturally relevant and data-driven model to assess risk and develop loans that fit the needs of smallholder farmers. Not only will this solution unlock millions of dollars of previously risk-averse capital for smallholder farmers, it will improve the livelihoods of entire communities, thereby alleviating poverty, hunger, and inequalities.

the MFSA published a Consultation Document proposing to (i) launch a FinTech Regulatory Sandbox, (ii) set up a framework for the regulatory certification of RegTech solutions, while also encouraging persons developing SupTech solutions to approach the Authority through a dedicated online form, and (iii) provide a status update on the other strategic objectives presented under Pillar 1 of the FinTech Strategy

MFSA FinTech Strategy Overview The MFSA aims to establish the foundations to enable FinTech start-ups and  scale-ups, technology firms and established financial services providers to develop viable FinTech solutions which drive innovation and enhance access to financial products, increase competition whilst promoting market integrity, deliver better customer experiences, and ultimately, contribute to the long- term success of the Maltese financial services sector.

The MFSA FinTech Strategy proposes to set out six pillars for the MFSA to create a holistic long-term approach to catalyse innovation, growth and competition in the financial services sector, whilst ensuring robust investor protection, market integrity and financial soundness.

By accruing farmer data, FarmDrive eliminates some of the risk for banks. FarmDrive has partnered with African financial firms who accept their alternative credit scores and determine appropriate loans for smallholder farmers. Lending institutions thus consider both the self-reported financial history of farmers as well as exogenous variables that will affect their crop yields.

FarmDrive depends on aid organizations, like USAID, and private firms that operate in the agricultural industry. FarmDrive is expanding its data collection through new partnerships with Planet, a satellite company, and The Impact Lab, a data analytics group, to potentially incorporate climate information gathered via satellite imagery into its algorithm.

BelCash Technology Solution PLC has partnered with two banks to launch HelloCash mobile money services in Ethiopia. Launched in partnership with Lion International Bank and Somali Micro Finance, the service will provide financial services to all Ethiopians

BelCash Technology Solution PLC has partnered with two banks to launch HelloCash mobile money services in Ethiopia. Launched in partnership with Lion International Bank and Somali Micro Finance, the service will provide financial services to all Ethiopians. It will enable existing and potential customers of Lion International Bank and Somali Micro Finance to carry out transactions in four key areas of financial transactions: Deposit, Withdraw, Transfer and make payments.

Key standouts of HelloCash include its interoperability and shared infrastructure features. The system is designed for multiple banks and MFIs to be interconnected and offer mobile money services to their respective customers. This allows partnering financial institutions to share each other’s agent and branch networks to serve each other’s customers.

The 2008 financial crisis has generated a confidence loss among financial institutions (banks), businesses, and customers. This erosion of trust is getting worse over time because of the financial services offered by their banks that have been deemed to be outdated by the clients. In our century, the march of technology, internet connectivity, and digital connectivity toward financial institutions are inevitable. This economic downturn leads financial institutions to turn to technology in order to improve their services vis-a-vis the clients, and prevent the spread of this trust crisis. In many financial service organizations, technology has moved from the back offices to the front. The industry has become the world’s most digitized one according to Strategy & Analysis; they say that 60 percent of all retail banking transactions now are done online. In Europe, more than 47 percent of ultra-high-net-worth individuals use Facebook and more than 40 percent of high-net-worth individuals under the age of 50 view social media as an important channel for communicating with their bank, according to a recent study by Assetinum. Similarly, a recent Deutsche Bank study finds that more than 33 percent of all new banking business with customers between the ages of 16 and 39 is conducted fully on the Web. Among these younger clients, online channels (including social media) have become one of the most important information sources for investment decisions