Why Fintechs Are Struggling By Ecobank Chief
The Group Head, Payments, Cash Management and Client Access, Ecobank Group, Isaac Kamuta has said that lack of corporate governance structure is a reason why most FinTechs are finding it difficult to scale up.
“A lot of FinTechs struggle because they overlook governance, they overlook control, they overlook regulation and these core are like weapons of mass destruction just waiting to explode at any point in time”, stated Kamuta on Friday at the virtual Ecobank Fintech Breakfast Series: Partnering for a stronger ecosystem.
Fintech, coined from financial” and “technology,” is a relatively new, and often unclear term that applies to any emerging technology that helps consumers or financial institutions deliver financial services in newer, faster ways than was traditionally available.
The aspect of trying to be faster than traditional banks makes Fintech not pay attention to governance and control structure that later become bottlenecks that hinder them from scaling up.
Speaking on the theme, “How bank-Fintech collaborations can drive ecosystem growth”, he however assured of Eubank’s commitment to supporting African FinTechs to grow in order to boost employment opportunities on the continent.
“As a bank, we are committed to supporting anybody out there that has a dream to succeed and that was why Ecobank was started. It was started to help Africans and deliver banking services to Africans on the continent. So we have a mission in ensuring that any African that has a dream, can get that dream fulfilled. So that is the starting point, we want everybody to succeed. We want more snd more unicorns to come out of Africa- generate employment, make banking services available to everybody.
He said all the FinTechs that are out there to solve problems actually need banking services, which Ecobank is available and ready to provide because the bank is always looking at helping FinTechs to scale up.
According to Kamuta, “It’s one thing to just have a solution, with the experience we have in this sector, we are always able to provide advisory service. As a bank we see everything, working with the big guys, working with the small guys in all sectors. From Agriculture to transport and when we sit down in a room and the focus we have is FinTechs, this has enabled us to provide advice and ask about whatever problems you want to solve, and how we can provide insight.
“As we provide this insight through a banking mindset, we are also not doing it from Nigeria’s point of view but a pan African view because we operate in 33 countries in Africa. We are in Senegal in the West to Zimbabwe in the South, to Sao Tome and Principe, to Gabon to East Africa, there is no part of Africa where we don’t have a significant presence. We are always going to sit down with you, listen to the problems, and bring in the African perspective, the local knowledge and the country of origin. And of course, governance is important.
“So when we sit down with FinTechs and point out these small things that bankers consider like an advisory board, add a few people to enable you to have a well thought out business case. That you should also look at how big the problem is. So that you are not just looking at the problem and this ensures that you don’t have problems with scale. So as I have said we are going to make sure that every African FinTech that has an idea is given a chance.”
On his part, Africa Partner, QED, Gbenga Ajayi, explained how FinTechs can leverage partnerships with banks depending on the business models.
He said, “In some cases, some fintechs are trying to disrupt banks, while in other cases they are trying to build relationships with banks. In some others, you could look at the regulatory aspect, infrastructural or sponsorship. It really depends. It’s not a one size fits all kind of thing. The truth of the matter is that banks speak to the market, it is very dependent on a whole of things. Some products are regulatory dependent, so Fintechs need banking partners’.
He cited a company that got to $300 million in revenue but not by direct association with a bank but went into direct association with a bank when it became an Unicon, buttressing that the technology product stack determines the point at which to associate with a bank.
Also speaking, Co-founder and CEO, of Bankly, Tomilola Majekodunmi said FinTechs should see their business like babies that need constant guidance.
“From the beginning, you are a baby that needs guidance. At the end of the day, as long as you are a FinTech, you need regulation, you need infrastructures, you need switches, you need a wallet system,” Majekodunmi said.
He advised that the first thing is to find a partner who is warm and open, adding that a regional bank in Nigeria adopted this by being open to Fintech which has now helped it to scale.
“it was a mindset they had that other banks didn’t have at the time. They just became like a partner to almost all of the FinTechs, they don’t make you feel like we are against each other but they were like we are in this together, we have the same goal and we are with you and they scaled. Just being able to do that. Now they are able to go into the market.
“So the first thing is to look at the bank with strength in whatever you are looking for – is it technology, is it infrastructure. Look for the bank that meets your need. if it is regulatory strength, look for the bank that has that. If it is credit, look for that bank. Because some banks do not do certain things especially when it comes to credit. Is it that they are more open to giving you credit to run your business, seek that out immediately and hit them and get the warm introduction to get things going,” she added.
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