This post covers Asia and Africa with an analysis of their Fintech companies.
ASIA
1. Asia has four major engines of FinTech innovation: Singapore, Hong-Kong, Japan and China. However, innovations by Japan and China20 are usually not catching traction – nor are meant to do so – on a global scale. Singapore and Honk-Kong are truly global players in FinTech but are relatively small and so far somewhat behind compared to London, NYC and the Valley.
2. The 2015 newcomer in Asian FinTech will be South Korea. The South Korean authorities have recently pointed out FinTech as one of the most important areas of focus and are working on special regulations that differ for established banks versus FinTech companies.
3. There is also a ‘best-kept-secret’ location full of FinTech initiatives in Asia, the island of Bali in Indonesia. The Bali FinTech community started with BitCoin enthusiasts moving to Bali in significant numbers. But, it continued with other types of FinTech ideas. Beyond a significant BitCoin ecosystem, the Bali FinTech community is working on setting up fully licensed banks. Bali is so far in many senses from the incumbent global monetary system that this disconnectedness and distance – FinTech people say – helps think outside the box and beyond established paradigms.
4. When it comes to brick and mortar banks,DBS Bank, the largest Singaporean bank often noted by international experts as the most innovative bank in the world. What our research experience shows is that DBS in not only innovative on the outside, but also very innovative (probably even more so) inside, in its internal processes. This is remarkable since there is a lot going on discussing external ‘symptoms’ of innovation, but there is very little internationally available information on what banks are doing with their internal processes and back-office solutions. DBS is certainly one of the bests (if not the best) on innovating internal systems.
ASIA FINTECH (MONEY FORWARD)
1. MoneyForward is a Japanese integrated personal finance solution. MoneyForward is truly genius, but its communication is very modest. It communicates according to the ‘promise less, deliver more’ principal. It has cooperation contract and IT integration with 1700 finance-related service providers, and MoneyForward users see their personal finances from all these partners on a fully-integrated dashboard automatically, without any manual data-entry.
2. Card accounts, bank accounts, loyalty cards, mileage cards, utility bills, medical billings, insurance billings, phone bills, phone-enhanced purchases, forex, equity and debt trading, investments, savings, credits, loans and mortgages, travel-related costs accounted electronically and many other electronically available finance-related things are visible on the integrated dashboard. This saves tremendous time when an overview or analysis is needed.
3. A shortcoming of MoneyTransfer is that it is absolutely Japan-focused. Its website is exclusively available in Japanese, and all 1700 integrated partners are in Japan. MoneyForward is optimized for tablet and smart-phone. Yosuke Tsuji started MoneyForward in 2012 in Tokyo, Japan. Since then, it has received cca USD 18 million capital and has won numerous awards: 2014 Good Design Award, Number 1 AppStore, Number 1 Google Play, and others. The most intense competitor of MoneyForward is free.
4. Yosuke Tsuji started MoneyForward in 2012 in Tokyo, Japan. Since then, it has received cca USD 18 million capital and has won numerous awards: 2014 Good Design Award, Number 1 AppStore, Number 1 Google Play, and others.
5. The most intense competitor of MoneyForward is freee. MoneyForward has a secondary service: a version for MSMEs (Micro Small and Midsize companies) and corporate clients. But, in the future, they will focus more on this because it brings revenue in an easier way. Currently it already brings half of the revenue.
6. MoneyForward has nearly two million users. It has a strategic alliance with Yahoo Japan. They are working on an online payment solution to be integrated into the product.
AFRICA
1. As many experts point out, the next 15 years are going to be the “Decade of the African Middle-Class”. As, for example, George Soros – the famous stock-market guru – pointed out, there is already an unprecedentedly dynamic growth of middle-class in Africa. This new middle-class is coming from an unbanked background and is quickly becoming banked. The number of new banking relationships formed in Africa (not counting the mobile banking relationships) is 30 – 50 million annually. Africa is really the frontier for bringing the unbanked, the underbanked and the new-to-banking populations on board.
2. The Mobile Banking Revolution is unique in its nature among FinTech trends. Its uniqueness comes from the fact that it started before the financial crisis of 2008. M-Pesa, the undoubted flagship of the Mobile Banking Revolution was set up in 2007. Over 50 percent of the African population lives in areas not reachable by branch-banking: no roads, no electricity, no security, and no infrastructure. But, even most of these people own a cell-phone (often not a smart-phone, but a non-smart mobile device). What if you can have a bank account on your phone? What if your account number is your phone number? What if you can send money to anyone else with a mobile device by sending a PIN secured SMS text message?
AFRICA FINTECH (M-PESA)
1. Started by Vodafone in 2007 in Kenya and Tanzania, M-Pesa has cca 30 million users worldwide. This is a perfect tool for the unbanked and underbanked. M-Pesa’s geographic spread is fast, but so far it is mostly present in its countries of origin: Kenya and Tanzania. But it’s gaining traction in India, Afghanistan, South Africa, Lesotho, Egypt, Mozambique and Romania. What determines where M-Pesa (or similar services) gets traction: regulation is the deciding factor. Emerging and frontier markets need a regulation that allows these mobile banking services to operate.
2. M-Pesa does have some stiff competition in other countries. An example is the company bKash, which is the Bangladeshi version of M-Pesa. They have the same concept but have a bank (BRAC Bank) as the majority owner. The company (bKash) is showing exponential growth, and it is considered by experts and investors a huge success. The Philippine market’s key mobile wallet player is GCash. GCash is owned by a telecommunication company.
3. There are six major types of transactions that M-Peas supports:
(i) Deposit: ID card or passport at agents.
(ii) Withdrawal: ID card or passport at agents.
(iii) Transferring money, making payments to users and non-users, paying bills, sending remittances, repaying microloans: phone via PIN secured SMS text messages.
(iv) Receiving funds, receiving microloans: phone.
(v) Purchase of goods and services: phone via PIN secured SMS text messages.
(vi) Purchase of airtime: phone via PIN secured SMS text messages.
4. M-Pesa, as a brand, has proven to be self explanatory. However, giving it a suitable and stable category-name seems to be a problem. Mobile banking, mobile money, mobile money provider, mobile payments provider, mobile wallet, mobile phone-based money transfer service, branchless banking service, microfinance provider and even digital currency are among the categories trying to describe M-Pesa.
5. There are far reaching social and socio-economic consequences of mobile banking in the emerging and frontier markets. Significant crime reduction is registered in countries well-penetrated by this service. Media is often worried about digital solutions, but facts show that it increases security and reduces corruption, crimes and violence.
6. There are trends in mobile banking- penetrated African countries of providing electricity through solar panels to families paying for the panels in tiny installments through their mobile-phone. Otherwise, there was no way to pay for electricity in areas really lacking infrastructure. This opened up a beautiful and socially thriving acceleration in the spread of electricity to families using mobile banking. These trends are beneficial for humanity.
