Fintech’s unique applications in emerging markets

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Financial technology (fintech) service providers have substantially improved their services and products in the last decade, owing to advances in technology. In Africa, this has happened despite inadequate connectivity and digital illiteracy in parts of the continent. Approximately 800-million people are not connected to the mobile internet in sub-Saharan Africa, out of 1.1-billion inhabitants, the 2020 World Bank census found. 

Of these 800-million people, some 520-million could access the mobile internet but do not, owing to factors such as not having a smartphone or not having the skills to use one, while 270-million people cannot access the mobile internet because they don’t have coverage.

Yet, despite these challenges, some fintech companies are making advances.

Jumo operates a platform that enables mobile money operators and banks to reach new markets. Using modern technology, such as cloud storage and advanced data analytics, Jumo is helping grow digital banking in Africa.

With a footprint in Tanzania, Ghana, Kenya, Zambia and Uganda, the company’s end-to-end technology banking services make use of precision prediction capabilities and it partners with banks and mobile network operators to connect consumers and small businesses to financial opportunities. 

In just five years, the organisation has disbursed $3-billion in loans to more than 18-million people across seven global markets. Its cost to serve a customer is considerably lower than a traditional bank due to minimal infrastructure costs and reduced cost of risk.

“Using alternative data points, combined with predictive analytics, Jumo is able to accurately assess a person’s propensity to repay a loan. Currently these data points can be applied to anyone who has a mobile phone and is connected to one of Jumo’s partner networks. This significantly increases the ability of previously excluded market segments to access finance,” chief analytics officer Paul Whelpton says.

In South Africa, a division of car insurer MiWay Blink is helping speed up changes in the fintech space by offering solutions that suit the emerging market’s own dynamics to enhance the customer experience.

South Africa, specifically, has a high accident rate and poor safety record, according to the International Transport Forum’s 2020 annual report on road safety. Using a smartphone-based telematics functionality, the insurer is able to detect car crashes via the MiWay Blink app installed on clients’ phones. The app sends a crash alert to its emergency call centre, which makes contact with the client immediately to arrange for assistance. This safety aspect helps the customer. 

The head of MiWay Blink, Christiaan Steyn, explains, “The alert on which we act is where the algorithm in the app detects a car crash based on a combination of sensor data in the phone such as speed or G-forces.” The insurer then contacts the customer or sends emergency services to the crash location if it was a severe incident and the client doesn’t answer their phone.

MiWay Blink uses the same telematics technology in its app to offer mileage-based premiums, where the customer pays less if they drive less in that month. This offers a more personalised customer experience in that the cost of insurance decreases in months when the customer’s car spends a lot of time in the garage.

Steyn says the solution isn’t always in developing cutting-edge technology; sometimes it is merely about using existing technology that consumers interact with regularly in clever ways. An example of this is the insurer’s use of WhatsApp voice notes to interact with customers.

Liferay makes software that helps companies create digital experiences on web, mobile and connected devices. As a software solutions company with an open-source platform, Liferay is an enabler for fintech companies that want to unlock potential in emerging markets.

The general manager at Liferay Africa, Ndagi Job Goshi, says: “Choice of technology matters. Whether the model is business-to-business, business-to-customer, business-to-employee, or business-to-government, or even a combination of each, we have found that flexible open platforms enable faster time to market and greater platform interconnectivity. We should not forget, however, that technology can never be the complete solution in and of itself. Rather, it should be viewed as being able to enable excellent customer experiences.”

Goshi believes that existing technology should be leveraged to resolve the issues that fintech companies face in emerging remarkets, rather than waiting for new developments to open opportunities.