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More Than Half of Millennials Happy to Opt for Digital-only Banks

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Global Banking - Investors King

More than half of millennials are happy to switch to or already have a digital-only bank, reveals a new poll from one of the world’s largest independent financial advisory and fintech organisations.

The results from a deVere Group global poll of 550+ clients born between 1980 and 1996 show that 59% of those surveyed already only ever use digital banking services or are planning to make the switch to do so this year.

The respondents are clients who currently reside in North America, the UK, Asia, Africa, the Middle East, East Asia, Australasia and Latin America.

Of the poll’s findings, Nigel Green, deVere Group CEO and founder, says: “This is more bad news for traditional banks, which seem to have been in a perpetual game of ‘catch-up’ in recent years amid evolving customer expectations, regulatory requirements and tech advances.

“The poll’s findings are a big deal for old-school banks.

“Why? Two reasons: first, millennials because they’re the fastest-growing cohort of clients; and second, because they are becoming the beneficiaries of the Greatest Transfer of Wealth in history.”

According to some estimates, $68 trillion in wealth is to be passed down from the baby boomers – the wealthiest generation ever – to their children and other heirs (millennials) over the next few decades.

Mr Green continues: “Millennials have grown up on technology. They are ‘digital natives.’

“They’ve been influenced by the enormous surge in tech as they came into adulthood – which came around the same time of the global financial crash that hit in 2008.

“Against this backdrop, they seemingly became comfortable using fintech [financial technology] to help them access, manage and use their money rather than using a traditional bank.”

Indeed, according to a Facebook white paper entitled “Millennials + money: The unfiltered journey,” 92% of millennials distrust banks and many view them as an unreliable source of information.

“Mobile-first millennials expect easy, immediate access and control of their finances in the palm of their hand. They demand to be able to transfer money and pay bills in one tap or swipe. They want to be able to review their spending habits, be offered guidance, and have real-time access,” says Nigel Green.

“In most cases, ‘too big to fail’ traditional banks are struggling to keep pace with the tech innovations that are now driving shifting customer expectations.  Legacy technologies and clunky business models are presenting considerable transformation challenges.”

As well as the on-the-go convenience, control and flexibility that digital-only banks offer, clients are also attracted by their green credentials.

Last year, the deVere CEO noted: “Individuals and companies are increasingly embracing and expecting green, paperless banking.

“This is partly fuelled by the pressing need for us all to drastically reduce waste and better protect the environment – something the pandemic and issues such as raging wildfires has collectively focused minds on – but also because a paperless system is, typically, a more convenient and efficient one.

“Traditional banks have a long way to go to catch-up with tech-driven challenger banks and fintech firms, which are intrinsically much greener and are leading the charge to a paperless future.”

Mr Green concludes: “Mobile-first millennials’ world view, in many regards, has been shaped by tech.

“It’s natural that they turn to fintech instead of a banking system that they perceive as outdated and/or untrustworthy.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Waffarx, First-Ever Cashback Website in North Africa, Raises New Capital

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WaffarX, the first-ever cashback shopping service in the Middle East and North Africa (MENA) region, announces it has completed a multi-million dollar financing round led by the Silicon Valley venture capital firm, Lobby Capital – for whom it is their first investment in the MENA region.

The endorsement by San Francisco-based Lobby Capital is significant for WaffarX. Lobby Capital is experienced in investing in successful cashback platforms, having been an early investor in the US firm Ebates, which was successfully sold to Japanese company, Rakuten, in 2014 – in what was Japan’s largest ecommerce deal at the time.

WaffarX will use the proceeds to expand its platform, drive user acquisition and enter new markets in the MENA region.

Founded in 2018 by Ezz Fayek, Mahmoud Montasser and Ahmed Kamal, WaffarX uses cutting-edge technology to distribute cash back rewards, helping shoppers save on every dollar they spend. WaffarX’s secure channel helps brands shift advertising spend directly to consumers via cashback rewards. This creates deeper loyalty for brands, whilst customers monetize their own data, instead of third parties.

Consumers want seamless, personalized engagement rather than disruptive advertisements – with easy-to-achieve, tangible cash rewards – transforming everyday transactions into savings. Brands want cost-effective digital advertising solutions and loyalty programs which focus on customers first and resonate with them. Brands can then incentive customers without discounting or devaluing products.

WaffarX has grown exponentially, and now has over 260 merchant partners and over 450,000 members. The company’s cutting-edge technology provides what modern consumers and merchants/brands want, and benefit both groups.

Ezz Fayek, Co-Founder and CEO of WaffarX, said:

“We’re delighted to have completed this latest funding round. The support of an esteemed Silicon Valley firm such as Lobby Capital, and existing investors – A15, are a huge endorsement of WaffarX’s business model and strategy.

“We have always been pioneers in our industry and our solutions are a win-win for consumers and brands. This capital raise will help us maintain our market leadership, break new ground in our platform, increase our user base and expand our geographic presence.”

David Hornik, General Partner of Lobby Capital, commented:

At Lobby Capital, we know the power of the cash back shopping model to drive growth for merchants, savings for consumers, and positive returns for investors. We also know the benefit of working with great founders like Ezz Fayek. We are very excited that the right business model and right people can come together for Lobby’s first investment in the region.

Karim Beshara, General Partner of A15, commented:

As early investors in WaffarX we are excited to see their continued success. Ezz and the team have been thought leaders in the cash back space in MENA and we are excited to see how they continue to innovate and bring new, exciting products to market.”

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TradeDepot Raises $110 Million to Expand Across Africa

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TradeDepot, a Business-to-Business company that connects consumer goods brands to retailers and assists with distribution raised $110 Million in equity to expand its buy now pay later offering across Africa.

The latest round is a Series B and comes 18 months after the company raised $10 Million in a round led by the International Finance Corporation (IFC) and Partech Africa.

The International Finance Corporation also led this round and investors such as Novastar, Sahel Capital, CDC Group, Endeavor Catalyst, and Partech Africa participated in the round.  Wale Ayeni, the head of Africa Venture Capital Investment for IFC, and Brian Odhiambo, the West Africa director of Novastar Ventures will join TradeDepot Board as part of the round.

TradeDepot operates a marketplace that connects small shops, kiosks, and retailers with wholesalers of global consumer brands. The company also helps with distribution by using its own warehouses and fleets of drivers to carry out distribution. TradeDepot offers buy now pay later services to merchants but instead of giving cash, it sends the products directly to them while they pay in installments. The monthly effective interest rate stands at almost 5%.

TradeDepot was founded in 2015 and is active across 12 cities in Nigeria, Ghana, and South Africa(10 cities in Nigeria, Accra, and Johannesburg), with the new funding TradeDepot, plans to double down active in these three countries and increase its footprint across Nigeria by trying to capture more than 5 million small and medium businesses it sees as its target market.

The IFC Managing director Makthar Diop said “The informal sector is a large and critical part of Africa’s economy, accounting for 80% of jobs in the region. We are excited to work with TradeDepot to leverage technology to help small businesses across the continent, particularly the many retailers led by women, access the resources they need to grow and scale.”

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Mobile Money Transaction Values to Exceed $870 Billion in Emerging Markets by 2026, as the Payments-as a Platform Model Accelerates

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A new study from Juniper Research has found that the total value of mobile money transactions in emerging markets will exceed $870 billion in 2026, up from $555 billion in 2021; respresenting growth of almost 60%. Mobile money in emerging markets includes microinsurance, microloans, microsavings and mobile money transfer.

This growth will be driven by the transition of mobile money vendors, such as M-PESA, to the PaaP (Payments-as-a-Platform) model. This model enables mobile money vendors to offer their users access to third-party services such as eCommerce; creating additional revenue streams. The research identified PaaP as critical to increasing revenue for mobile money vendors, as smartphone adoption and user expectations grow. The new research recommends that mobile money vendors focus on building their ecosystems now by agreeing merchant partnerships to correctly leverage this opportunity.

For more insights, download the free whitepaper: The New Wave of Fintech Innovation in Emerging Markets

Microloans Represent Fastest-growing Segment

The new research, Mobile Money in Emerging Markets: Segment Analysis, Vendor Strategies & Market Forecasts 2021-2026, found that microloans will be the fastest-growing segment within mobile money, with growth of over 180% over the next five years. The research identified microloans as a key way in which mobile money service providers can increase their revenue by delivering banking-like services.

Research co-author Damla Sat explained: “While microloans are, by their very nature, small-scale, they are growing rapidly in significance, by enabling users to access credit as financial inclusion rises. By offering these services to users, mobile money services can pre empt competition from banks, while increasing their average revenue per user; creating a virtuous circle.”

Africa & Middle East Leading Mobile Money Development

The research found that Africa and the Middle East will dominate mobile money transaction values over the next 5 years; accounting for 56% of the global emerging markets value by 2026. It recommends that vendors in Africa focus on expanding sophisticated mobile money services, such as microinsurance and microsavings, in order to best address this rapidly growing opportunity.

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