Partnership is the way forward

[mouakter13]

The interesting thing about working in emerging markets like those in Africa is that lessons may sometimes be learned from how disruptive models have fared elsewhere. For example, the jury is still out on whether challenger banks such as Nubank (Brazil), Revolut (U.K.) or Chime (U.S.) will be able to completely replace incumbents in their markets and be profitable on a sustainable basis in the future. But what is quite clear is that these models can grow a customer base quickly, and could potentially become the main transaction platform for some customers — while traditional banks remain as a utility in the background, with a lower-margin business based on safe deposits.



The banks that learn to partner effectively with these fast-growing startups will likely yield significant returns on equity, as has been demonstrated in other markets. There are many problems to solve in financial services in Africa, such as expanding financial inclusion, facilitating cost-effective payments, extending credit where traditional scoring data is scarce, and a lot more. Cash remains king on the continent, and its reign appears to be very secure. There is more than enough business to capture just by working to transition individuals and businesses away from cash, which costs African governments korea whatsapp number data billions of dollars annually to print, distribute and replace.

Established banks do not have the luxury of playing the valuation game which some fintech startups are involved in, as they must deliver real profits and dividends to shareholders each quarter. However, ignoring the ongoing fintech revolution is not a prudent strategy, as customer behavior is quickly changing and this can have an impact on banks’ bottom line. The financial institutions that adjust to the rapidly evolving business landscape by improving customer experience via innovation and developing stronger partnering capabilities will continue to thrive, as technological changes sweep through the industry. Time will reveal the winners and losers.