Money makes the world go round! Whether carrying around huge wads of cash, coins jangling in your pocket, plastic or mobile solutions, without money, we wouldn’t get very far. With robots set to take many of the current jobs, the future may see us have a very different relationship to money, that is if money still exists. But, in the now, there is no escaping it, and that is the same in the Fintech sector.
The world’s tech companies are clamouring to come up with the next big financial solution. Banks are trying to keep up, while other companies try to find new and easier payment methods, as well as create synergies with other industries, for example insurance and credit. In Africa this is especially so, with financial inclusion so important and a huge market for Fintech to continue to tap into. In recent years, so many Fintech solutions have popped up around Africa. From blockchain technology, making it easier for individuals to invest in solar energy, to new crowed funding systems, or payment structure like mobile money, Fintech solutions are always represented at innovation awards around the country.
This week is no different, with 4 Fintech solutions each took home $70,000 at a the Broad-based Black Economic Empowerment pitching event, aimed at finding talented Fintech entrepreneurs, hosted by AlphaCode. The event is an initiative of Merrill Lynch and we will feature some of the winners here!
For many in Africa, getting credit is almost impossible. With few assets, and often without a bank account, it is very difficult create a credit profile of an individual, or small business. Many companies, such as Lending Square in Ghana, are currently trying to tap into the informal market to enable individuals to have access to credit to develop their businesses. Commuscore is also an alternative credit scoring provider helping South African savers gain access to credit. The platform enables individuals to manage their savings comprehensively. From meetings, contributions, loans and even penalty payments, the system makes the saving process easier. With all the saving management able to be done under one platform, banks are then able to use the credit score, provided by Commuscore, to apply for loans, mortgages and credit, which would not have been possible before.
Insurance is an important aspect of life. We insure our homes, our pets, our belongings and even our lives, but often, this is just a bet, that we may end up losing. Our money goes into the the insurance scheme, and if we don’t get into trouble, it stays in there, never to be seen by us again. Unless you are on to a sure bet, like many living by oceans in the USA, who are sure to get paid out by their Flood insurance over and over again, it is often the case that we pay far more into the insurance than we get out of it.
Cascade is an insurance with a difference. They break their insurance down so the consumer knows exactly where and how the money is being used. From the costs of running everything, to providing the insurance cover, and the balance, which goes into a personal savings pot, you can follow your money around the system. If you need to claim on your insurance, the money comes out of your personal savings pot, and any thing over the amount will be covered by Cascade. At the end of the year, it is possible for the consumer to take up to 20% of the accumulated Cascade Savings as a cash dividend. This means that the customers knows exactly how much money he is putting into the system, and knows that it doesn’t just disappear, either remaining in their own personal savings pot, or back in their bank account.
I wasn’t able to find a website of this innovation, but it makes it no less interesting. Investsure deals with the issue of fraud, which is a stereotype that permeates through the African continent. The perception of widespread fraud often creates a feeling of distrust in Africa, both within the continent and with potential investors from outside the continent. If a hint of fraud hits the media, whether true or false, it can destroy the value of a company. So how do you protect against this?
Investure provides an insurance to shareholders to protect them against any losses in share price caused by actual or perceived perception committed by management. This enables investors to secure their investments, but it doesn’t mitigate against the damage to a company if fraud hits. It is a good a necessary innovation to provide a better environment for investors in Africa, but it does magnify the issue of fraud in Africa, potentially creating greater uncertainty outside the continent.
Fintech is continuing to make waves in the innovation community. It is driving the financial sector in Africa forwards, and increasing financial inclusion of the informal sector. Africa has a chance to lead the world in Fintech. The markets there are more open to innovation, with much of the rest of the world used to mature yet sometimes inefficient banking systems. Expect to see more huge moves in the African Fintech sytem in the coming year.
If you know of any innovations in Africa, an innovation that is changing lives, or you also want to be a guest blogger, get in contact with us on Twitter @inventiveAfrica or via email. Please she the blog with your network on Twitter and Facebook.