Financial PlanningTechnology

Advancing fintech changes in the emerging market environment

Fintech service providers have offered their markets substantial improvements to services and products in the last decade owing to advances in technology. But more than cutting-edge technology, it takes decisive leadership and direction to achieve meaningful change in emerging markets.   

The emerging market environment poses its own challenges, like lack of proper connectivity in Africa and digital illiteracy, but fintech service providers have to make this environment work for their clients and themselves. 

To give context, there is a major gap when it comes to digital access in Africa. There are approximately 800-million people not connected to the mobile internet in Sub-Saharan Africa out of approximately 1,13 billion inhabitants, as recorded by a 2020 census by the World Bank. Of the 800-million, some 520-million can access the mobile internet but don’t, because of factors such as the lack of smartphone penetration and scarcity of skills, while 270-million cannot access the mobile internet because they don’t have the requisite coverage. 

Yet, despite these challenges, some fintech companies are making advances in remarkable ways, as these examples reflect.  

AI and financial services 

Financial technology company JUMO operates a platform that enables mobile money operators and banks to reach new market segments. By using the advantages of modern technology, such as cloud storage and advanced data analytics, JUMO is fuelling growth in the digital banking sector in Africa.  

Having a footprint in Tanzania, Ghana,  Kenya, Zambia and Uganda, the company’s end-to-end technology banking services make use of precision prediction capabilities. Essentially, JUMO is a learning machine and credits its prediction capabilities to its rate of learning. This informs the products they create for customers, some of whom wouldn’t be able to access credit through traditional means. 

The  company partners with forward-thinking banks and mobile network operators to connect consumers and small businesses to financial opportunities.   

Through these partnerships, JUMO has reduced the cost to serve mass market customers to less than $1 dollar a year, enabling wider eligibility and inclusion. In just five years, the organisation has disbursed over $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 . 

JUMO’s Chief Analytics Officer, Paul Whelpton, says, ”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.”  

JUMO records collection and repayment rates of 96% on average and, in May 2021 alone, it disbursed over $100 million, a new record for the company. 

Advancing change in car insurance digitally 

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

South Africa, specifically, has a high accident rate and poor safety record, according to the International Transport Forum’s 2020 Road Safety Annual Report. Using a smartphone based telematics solution, the insurer is able to detect car crashes via the MiWay Blink App installed on clients’ phones. The App sends a crash alert to their emergency call centre, which makes contact with the client immediately to arrange for assistance. This safety aspect adds a lot of value to the customer experience.   

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 like speed, g-forces, etc.” The insurer would then contact the customer or send 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 their 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 utilising 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. 

Digital enabler 

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 some fintech companies working to unlock their full potential in emerging markets. 

General Manager at Liferay Africa, Ndagi Job Goshi, says, “ The important thing is to realise that choice of technology matters.  Whether the model is B2B, B2C, B2E or even B2G, or even a combination of each, we have found that leveraging flexible open platforms enables faster time to market and greater platform interconnectivity. That being said, we should not forget that technology can never be the complete solution in and of itself. Rather, it should be viewed as an enabler of excellent customer experiences, which is what we seek.” 

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. 

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