Fintech

FirstBank Fintech Summit 5.0: How Open Banking Can Address Market Frictions, Grow Nigeria’s GDP to $3 Trillion by 2035 – Ndubuisi Ekekwe

Published

3 years ago

October 8, 2021

Professor Ndubuisi Ekekwe, the Chairman of FASMICRO Group and the lead Faculty in Tekedia Institute, on Thursday discussed how financial institutions can use open banking access to address market frictions, improve the standard of living, further economic productivity and transform the Nigerian society into an innovative society.

Speaking at the virtual FirstBank Fintech Summit 5.0 on Open Banking: The Grand Unification of Application Utility Age, Prof. Ekekwe posited that if according to Pythagoras the world is made up of numbers, then ‘it means the business of humanity is nothing but the business of numbers’. Meaning, if a doctor understands the numbers around the human system, he/she will become a better doctor, it is the same for banks and other businesses. Therefore, the quest to getting better in any industry or society is to build a solid data system that allows operators to better understand the numbers around that industry or society.

The Prof break this down by using the inherent imperfect market systems that impede big businesses from understanding the needs of those in the rural areas, therefore, making it impossible to profer solutions that could help further these companies’ missions and visions, fast track their growth and help humanity at large.

Using a chart titled ‘the Mission of Firms’, Prof Ekekwe stated that because the demand knows something that supply does not know and vice versa, it is cogent for businesses to acquire capabilities that enable them to bring demand and supply to an equilibrium point where supply can succinctly address demand.

Banks, Restaurants, Fintechs, etc must acquire capabilities that help them understand societal needs before they can profer solutions necessary to make transactions happen. Professor Ekekwe cited the bank’s position as a depository and also a lender, this he said makes it possible for borrowers willing to pay a certain percentage as an interest to approach banks for loans while those not presently in need of their money can equally deposit it in the bank for a fraction of the interest paid by borrowers. By addressing this market friction, the bank was able to make transactions happen, support borrowers’ business and satisfy the need of depositors.

However, because companies that only serve the needs of customers will never be great. It is important to understand not just customers’ needs but expectations and perceptions. This, Prof Ekekwe said can be achieved through the insights provided by the improved data of open banking, saying open banking offers promise to have a better insight into the future of customers.

Therefore, to unlock new growth, financial services providers must become an operating system through shared APIs for all sectors. More data will translate to better insights and more market opportunities that could bolster Nigeria’s Gross Domestic Product (GDP) to $3 trillion by 2035 as other companies will have access to those customers through APIs.

Using the chart below, Prof Ekekwe revealed how banks can access data from all sectors through Open Banking innovation and use this information to understand what businesses and customers in the agriculture, healthcare, technology, real estate and education sectors expect of them.

According to him, the knowledge system the bank can acquire from open banking ordinance will not only affect the financial services but also have the capability to impact mortgage business, real estate business and other businesses in our society.

He further stated that the effective implementation of open banking will increase available opportunities in each sector by a factor of six, bolstering Nigeria’s GDP to $3 trillion by 2035. Explaining how this can be achieved, he said banks and other businesses with data from APIs will be able to expand their offerings by understanding the needs of those in the rural areas, therefore, sharing progress and prosperity in abundance across rural regions.

Bringing it all together, open banking takes banks beyond financial services to become Operating System (OS) of economies by providing retail customers with necessary analytics, viable credit systems that provide insights into their activities and encourage intelligent lending while Small and Medium Enterprises (SMEs) would have an integrated tax and accounting interface that empowers them to understand their own business, cashflow and deposit better.

Other sectors like real estate, Oil and Gas, etc perform better with Open Banking, and even compliance with regulatory guidelines become better and improve with a well-thought-out and executed open banking architecture. This, Professor Ekekwe concluded would transform Nigerian society into an innovative society.

Up Next

Carbon, Network International Partner to Deepen Digital Payment Offerings

Don't Miss

Digital Bank in Nigeria: List of Digital Banks in Nigeria

Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Comments

Fintech

US Continues to dominate Global FinTech Landscape in Q3 2024, Witnesses Funding of $2.7B

Published

1 week ago

October 18, 2024

Samed Olukoya

The US boasts of a bustling FinTech landscape with more than 7K funded companies and 137 active FinTech Unicorns. Though the US ranks first globally in terms of funding in the FinTech sector in Q3 2024, this is the least funded quarter in the past five years.

Q4 2021 was the highest funded quarter in this space, after which the funding started to experience a steady decline.

Tracxn, a leading global SaaS-based market intelligence platform, stated in its Geo Quarterly Report: US FinTech Q3 2024.

The US FinTech startup ecosystem raised $2.7 billion in Q3 2024, a 30% decline compared with $3.9 billion raised in Q3 2023 and a 40% decline from $4.5 billion in Q2 2024.

Late-stage funding in Q3 2024 fell 32% to $1.3 billion, from $1.9 billion raised in Q3 2023. Early-stage investments stood at $1.2 billion in Q3 2024, a drop of 29% from $1.7 billion in Q3 2023. Seed-stage funding, too, fell 49% to $186 million from $364 million in Q3 2023.

Three companies attracted funding of $200 million and above. Human Interest raised $267 million in a Series D round at a post-money valuation of $1.33 billion, while FLYR raised $225 million in a Series D round. Earned Wealth secured $200 million in a Series B round.

Three other companies reported $100M+ rounds, with Aven becoming the only new unicorn in the third quarter of this year, after raising $142 million at a valuation of $1 billion.

Finance and Accounting Tech, Payments and Investment Tech were the top-performing sectors based on funding in Q3 2024 in this space.

The Finance & Accounting Tech segment witnessed total funding of $643 million in Q3 2024, a drop of 34% compared to $967 million raised in Q3 2023.

Funding raised by the Payments sector fell 22% to $573 million in Q3 2024 from $737 million in Q3 2023. Investment Tech companies raised a total funding of $547 million in Q3 2024, 18% lower than the $669 million raised in Q3 2023.

The third quarter of 2024 was weak in terms of exits. None of the companies from the US FinTech sector went public in Q3 2024, as against one IPO each in Q3 2023 and Q2 2024.

The number of acquisitions too, fell to 48 in Q3 2024 from 54 in Q3 2023 and 62 in Q2 2024. ShareFile was acquired by Progress at a price of $875 million, and Stronghold Digital Mining was acquired by Bitfarms for $175 million.

Among US cities, San Francisco and New York City together accounted for 50% of the total funding raised by the sector in the third quarter of this year.

FinTech startups based in San Francisco raised $750.2 million, while those headquartered in New York City and Santa Monica raised $610.1 million and $225 million.

Y Combinator, Techstars and a16z are the overall top investors in this space. Y Combinator, Castle Island Ventures & Plug and Play Tech Center were the top seed-stage investors in Q3 2024, while Curql, Redpoint Ventures and Brewer Lane Ventures took the lead in early-stage investments.

The US government is taking several initiatives to stimulate investment and innovation in the FinTech sector, which could give a boost to these startups in the coming years.

Fintech

Kazang Pay Launches Card Acquiring Service in Zambia

Published

3 weeks ago

October 2, 2024

Samed Olukoya

Kazang, the prepaid value-added services (VAS) and card acquiring business within JSE-listed fintech Lesaka Technologies, has launched its Kazang Pay card acceptance solution for merchants in Zambia. Kazang Pay makes it affordable for merchants to accept card payments on the same Kazang terminal they use to sell prepaid products and services.

The Kazang Pay enabled terminal in Zambia accepts VISA debit and credit cards as well as mobile wallet payments. Payments are settled to the merchant’s Kazang wallet on the same day. It’s as easy as letting the customer tap or insert their bank card and enter their PIN on the secure scramble PIN pad.

Kazang operates around 12,000 VAS terminals in Zambia. The goal is to enable the majority to accept card payments over the next six months. Benefits to merchants include low transaction fees and no monthly terminal rental fee for those that meet a modest monthly transaction threshold as well as the opportunity to grow their business through card acceptance.

Kazang is Zambia’s largest VAS point-of-sale terminal provider, enabling mobile money payments, bank and mobile money cash in and out, bill payments, airtime, Zesco, and many other prepaid services on one platform. The addition of card acceptance makes the platform even more comprehensive for merchants and consumers alike.

The launch of Kazang Pay in Zambia follows the introduction of the solution in South Africa, where around 60,000 small and micro merchants use Kazang Pay to accept card payments. In Zambia, there are around 3.8 million debit, credit and ATM cards in issue and 41,000 point of sale (POS) terminals in place. The value of POS transactions has grown to K 111.4 billion by 2022 from less than K 20 billion in 2018, according to the Bank of Zambia.

Says Leon de Wit, managing director at Kazang Zambia: “Zambia has made enormous strides in terms of financial inclusion, with card usage and penetration growing at a rapid pace. With Kazang Pay, merchants can now easily accept card payments on the same all-in-one terminal they already use for vending of VAS products.

“Card transactions help merchants to grow basket sizes and potentially attract more customers, and at the same time, reduce the risks and costs of handling cash. Moving towards digitalised payments will also enable merchants to track sales, manage cash flow, and create a footprint that could make it easier for them to access loans.”

Ashley Naidoo, director of Kazang Pay in South Africa says: “Our Zambian merchants have eagerly embraced our card acquiring service as a valuable part of our one-stop solution. Following the launch of Kazang Pay in Zambia, we have seen higher VAS sales across our merchant base and much-improved merchant retention and with our card acquiring solution we now appeal to a broader merchant base.”

Fintech

PayRetailers Expands Into Nigeria, Other African Countries

Published

1 month ago

September 18, 2024

Samed Olukoya

PayRetailers, the leading payment processor for Latin America, has today announced further expansion into Africa.

With coverage now across 12 countries, the company offers a unified simple payment solution that will be a game changer for cross-border online merchants looking at Africa as their next move for strategic growth.

PayRetailers offer a simple, user-friendly, and scalable experience to businesses looking to grow their regional operations and give them access to major local payment methods like MPESA, Airtel, and MTN.

The further expansion includes Burkina Faso, Cameroon, Kenya, Ivory Coast, Ghana, Senegal, South Africa and Nigeria, having recently launched in Rwanda, Zambia, Uganda, and Tanzania three months ago.

This expansion effort further solidifies PayRetailers’ ability to unlock new growth opportunities for their clients, giving them easy access to additional emerging markets. For existing clients, in fact, this process requires zero integration efforts, as it is all handled via the same API.

With many populations across Africa being underbanked, PayRetailers accelerates financial inclusion across the region by supporting businesses with their growth journey. The market is increasingly mobile and connected, with global businesses seeking to tap into the strong growth opportunities across Africa.

The expansion marks a significant milestone in PayRetailers’ ambitious growth plans, with further expansion planned into more African countries as well as Europe. Leveraging its extensive experience in Latin America, the company is well equipped to address the unique needs of African consumers and businesses.

Jonathan Vintner, Global Head of Sales at PayRetailers, said: “Expanding into eight new markets marks a significant milestone for PayRetailers as we continue our mission to bring tailored payment solutions to diverse regions. Africa is a vibrant and varied continent, with payment preferences that differ from region to region.

“For example, our launch in Kenya enables merchants to access M-Pesa, the country’s leading mobile money provider, while in South Africa, we’re offering a blend of card and cash solutions to meet local demands. All of this is seamlessly integrated into our existing API, allowing merchants to access the top payment methods across Latin America and now Africa through a single connection—with more countries on the horizon”.