I was eager last Friday to wrap up my week by participating in the Next Bank Accra Fintech meetup which I had signed up for the previous day. After countless hours in Accra’s Friday rush hour traffic, I managed to get to Banana Street somewhat early when the first speaker Todd Holcombe, Senior Faculty of MEST was delivering his talk. The reason for my excitement to attend the event to the fact that I would be meeting other entrepreneurs in the fintech space as well as the insights I would be gaining with respect to Nitrogen Limited’s (a tech company I co-founded in 2012) current projects. I was indeed not disappointed with the outcome of proceedings at the event.
To start off I must highlight that the main topic for discussion for the event focused on designing optimal user experience for financial products and services but the capable moderators struggled to contain discussions within the theme resulting from the general explosive concerns of entrepreneurs and industry persons among the participants who had these concerns bottled up for so long and needed an outlet. The event paved way for all concerns to be raised. In the next few paragraphs, I will attempt to itemize the main issues that were discussed in relation to fintech in Ghana among others.
Business Opportunities & Innovation for Fintech-preneurs
Todd and a few other participants and panelists gave examples of the numerous business opportunities they found just undertaking a simple bank transaction in a Ghanaian Bank or resulting from the frustrations they experienced. It is a common misconception that fintech revolves around payment systems only. There are numerous processes involved in enabling banks and Financial Institutions (FIs) to provide financial intermediary services and entrepreneurs can leverage on the downsides of the existing processes. In the Ghanaian context there is a lot of paperwork involved in financial service delivery and the economy is still largely cash based. These are the core issues that revolves around which fintech-preneurs can be innovative. Henry Sampson, Lead Engineering & Research at DreamOval made some really sumptuous points regarding the fact that banks and FIs were not willing to open up their systems for tech companies for fear of security breaches, loss of data to competition, etc and these points for me actually summarized the fintech-preneurship climate in Ghana and maybe Africa. He also attributed the lack of faith in local fintech startups by these institutions to the demand for Over the Counter (OTC) products from overseas which often had a stuffed package which the FIs often had little use for, not in sync with local customer demand and often too expensive emphasizing the need to allow fintech-preneurs to focus on the specific local customer needs, innovate and grow with the banks and FIs.
The Broad Challenges
Many relevant issues were identified at the event and were talked about in a broad perspective by both panelists and participants. Let’s discuss them briefly.
Unwillingness of Banks and FIs to Adopt Change
Many panelist spoke about the difficulty to secure contracts and the lengthy time it takes took to conclude deals. Apparently in Ghana, there is usually a lack of straightforwardness on the initial contact and after the pitching phase. It was determined at the meeting that the problem stems from a communication barrier at the initial stages of marketing with the FIs not able to sift through the technical language thereby missing the salient points that show how their companies can benefit from the solution being marketed.
Perceived High Risk
Another reason for the reluctance was determined at the meeting to be the fact that FIs hold risk out as a make or break factor and are reluctant to make changes to their existing systems. Banks especially are heavily regulated since they are deposit-taking and thus the safety of depositors’ funds is paramount to regulators. This was determined to contribute to the lengthy time it takes to close deals with fintech-preneurs. Many FIs also have tedious bureaucratic checkboxes to tick when it comes to system changes. Changes may involve an approval from the Board of Directors, infrastructure procurement and test environment setups to try new changes offline first before approvals for production.
Availability of OTC Software
Why try a local company when you can easily order, pay and install tried and tested software? This brings us back to the point previously discussed in the third paragraph. FIs are willing to bear high costs for proven stable software which may cost cheaper when designed locally as these large tech organizations usually charge very high maintenance and support fees whiles they may not supply the most readily available support promised. Fintech-preneurs often have more drive, are hungry for market penetration and success and may invariably provide more support. On the other hand, OTC software provide the needed plugins and have large teams to solve challenges quickly. Mr. Sampson made an excellent point when he asserted that OTC software usually possesses large capability but most of the functions are often unused because they do not suit the Ghanaian banking climate and mostly with FIs’ underutilizing the features whiles paying for the full package. This gap can be easily eradicated by fintech-preneurs.
Innovation Lacking on the Part of Banks and FIs
A strong point that was made by the panelists was about the fact that banks especially find it easy to make profits in Ghana and therefore do little to engender financial inclusion as more than 60% of Ghana’s population is currently unbanked. The latter point was mostly emphasized by Curtis Vanderpiuje, CEO of Expresspay and Ex Visa Consultant. There is therefore lack of passion to drive sales harder or to rope in the poorer or not so technology inclined segment of the population. It was noted however by some banks represented at the event that Pont of Sales Terminals and mobile technology could help solve this but must be strongly driven by the FIs and some banks had already started this as a major project. Ultimately, it when FIs realized their bottom line could soar but widening customer base through innovation, this could make a strong business case to invest more in technology.
Mis-Design and User-Unfriendly Priorities
The earlier part of the meeting focused on design and user experience in the financial climate of Ghana. This was about the most exciting part of the meeting as many participants had the opportunity to share their interesting experiences with the FIs which emphasized the opportunities existing in that industry. Points made pointed to the fact that FIs clearly did not design products and services with the customer in mind. This makes customers unable to clearly identify with the products which are setup along with capabilities of the foreign OTC software without cognizance of local customer demands and expectations. Customers likely to be loyal are those with matching user experience expectations with the services on offer.
Regulations was also identified as an issue with respect to lengthy negotiations and design implementation. The point was made about the fact that since banks are heavily regulated, every solution designed must be checked against approved laws laid down. The panelists explained that it was incumbent on fintech startups to do adequate research on their projects and ultimately comply with industry standards.
Paul Damalie, NextBank Accra Chapter Lead wrapped up the first Next Bank Accra Fintech meetup by stating that the next event will be announced soon and took suggestions from participants on how to make the meetings better. The event concluded with a networking session.
In summary, I think the event opened some doors for business ideas to flow freely among participants and a lot of the points raised during the events were relevant to most startups. Most problems were identified with clear examples given to illustrate them by the key resource persons in the panels. One downside was the fact that the event was not evenly balanced as the technology entrepreneurs in the participants outweighed the industry persons leading to more setbacks being discussed without associated solutions on a few occasions. Paul however promised to bring more balance to the subsequent sessions. Other notable panelist at the event were Ashwin Ravichandran, Interaction Designer at MEST, Derrydean Dadzie, CEO at DreamOval and Arnold Kavaarpuo, Head Mobile at afb Ghana.
NextBank Accra was worthy of my Friday evening and I look forward to the next session. See you there hopefully.
You can follow Next Bank Accra Chapter on twitter.