Each year, I find myself reflecting on the progress we have made on financial inclusion, but also on the challenges ahead and how we as CGAP can contribute towards tackling them. This question came into sharp focus for me in the closing months of 2018, when I attended two events focusing on fintech – the Singapore Fintech Festival and IFC's annual meeting of its fintech investees. There is an incredible amount of excitement around fintech. I met people working on insurtech, payments, reverse factoring platforms, blockchain-based identity solutions, digital micropensions, marketplace lending platforms, digital credit, e-commerce, regtech, suptech, artificial intelligence, machine learning…literally, everything under the sun. There is so much energy, creative thinking and money going into this space, it is breathtaking.
FinTech business in Africa makes use of A.I & credit technology. MyBucks, a German listed FinTech company that holds three brands GetBucks, GetSure and GetBanked, has said its partnership with NGO (non-governmental organisation) Opportunity International continues to take strides forward in their vision of bringing financial inclusion to the unbanked and underbanked in emerging markets – most specifically in Africa. In a move that is contrary to the current trend worldwide where banks are acquiring FinTech companies to add value and expand services, the partnership marks, according to the company, the first time a FinTech company has acquired banks to bridge the gap between the virtual and traditional worlds of banking. This is ultimately to enable faster, more efficient and less expensive access to financial services for clients. The conclusion of the acquisition of four banks and two microfinance institutions from Opportunity International will add Ghana, Tanzania and Mozambique to MyBucks' country portfolio and regulatory approval has already been granted in Kenya, Tanzania and Mozambique.
Addis Ababa, Ethiopia - It's afternoon in Addis Ababa's bustling Bole Michael district, and businesswoman Hukun Aden Mohammed is doing a brisk trade. The 45-year-old, single mother of seven opened her modest cosmetics and snack shop in the heavily ethnic Somali neighbourhood two years ago. Business is so good, she's planning to grow and diversify. "I plan to expand my business by opening up a shoe store," Mohammed told Al Jazeera. "Inshallah (God willing) I also plan to open businesses in my home city, Jijiga in Somali regional state and across other parts of Ethiopia."
Lahore, Pakistan - Zeenat Afza saw her whole world come crashing down when her husband, who worked in Saudi Arabia as a tailor, died of lung cancer in 2006. However, buried in 1.75 million rupees ($1,6700) of debt and with four young children to support, the housewife had little time to grieve. "When my husband passed away, everything finished," she told Al Jazeera, while stitching in the living room of her first floor three-bedroom apartment on the outskirts of the eastern Pakistani city of Lahore. "I had nothing, but a lot of debt." The 53-year-old widow took a 10,000 rupee ($95) loan from Kashf Foundation, a non-profit microfinance institution (MFI), and started a small stitching business from home.
Recognizing this, many FinTech startups in Africa are using a "high-touch," in-person approach to customer relations with their low-income customers. But doesn't this increase operational costs and hinder the scalability of these FinTech startups? Are they more likely to fail than counterparts in other markets? Last year, CGAP began working with several FinTechs to pilot and scale digital finance innovations for low-income customers in Africa. Through that work, we are seeing FinTechs find ways around their customer relations challenges by teaming up with a variety of organizations, from farmers' associations to savings groups.