Banks fight for relevance as fintech rises to meet real needs
You missed out if you did not attend Simodisa’s first Future of Fintech Startup Thursdays discussion hosted by AlphaCode recently. The clubhouse was filled with business founders, funders, aspiring startups and ecosystem builders who gathered to seek inspiration from three seasoned fintech pioneers and experienced innovators in the space.
“There is not a lot of love left for traditional banks and their out-dated obsession with proof of payment slips. This is why they are seeking new ways to reinvent themselves to become financial service providers that are relevant to real people in our changed and changing world,” began Farzam Ehsani, leader of the Blockchain initiative, Rand Merchant Bank.
Farzam Ehsani debunked the myths around Bitcoin and Blockchain. “Financial services are changing drastically and will soon change beyond recognition. We are living beyond the governance structures of society and are moving towards a society that is transcending man-made borders and structures. Bitcoin is a digital currency that is not backed by any country's central bank or government. Bitcoin does not respect the boundaries of nations. It is about people’s collective faith, and it is about the perception of what is of value. The blockchain is a public ledger of all transactions in the Bitcoin network.
“The take out for us here in South Africa is that if your businesses pander to a particular portion of the world, a nationality, a niche group of people, you are limiting yourself. This is what makes financial technology so exciting because it’s an incredible display of innovation and radical thinking as the world becomes a smaller and smaller place.”
Chipo Mushwana, head of Ecosystem Development and Management at AlphaCode explained that “AlphaCode has provided a home to South Africa’s fintech - sector and through its unique model that brings entrepreneurs, thought leaders and industry experts has enabled this sector to develop and expand. This is clear through the interest and businesses that we interact with daily. To date, AlphaCode has a total of 76 fintech businesses, 120 members, and growing.”
Mushwana highlighted AlphaCode club members such as Merchant Capital that were making their mark in SME financing, where traditional institutions have not been able to meet this growing demand. She said institutions are beginning to understand that they need to work with startups such as AlphaCode’s Isazi Consulting and Emerge Analytics to offer a service that they cannot build in-house. These businesses, which offer advanced data analytics, can be used for alternative credit scoring and innovative insurance risk selection, and AlphaCode expects to see more applications from fintech startups that specialise in data analytics in 2017.
Angus Brown, co-founder of eBucks.com and MD of Banking Acumen, an AlphaCode Club member followed: “Banking is a verb – a doing word that describes an action or an experience. It is not an institution or a mechanism that gives you special permission to use your own money.”
He shared his experience at First National Bank when he launched a new concept in South African banking. “As part of First Rand, FNB recognised the need to make its mark in the South Africa’s business to consumer e-commerce space. Thirteen different ideas, 90 days and as many sleepless nights later, eBucks Rewards was born. A simple idea based on earning and rewarding but no easy task to set up from a zero-base and be live, completely integrated into the bank’s traditional systems, in just three months.”
Speaking to new fintech startup businesses present at the gathering, Brown cautioned against the word ‘startup’. “By definition, this implies a moment in time and it becomes static. Serious financial technology entrepreneurs must be fierce, work with pace and speed, be clear and determined. Know your offering, live it, know your worth, and go for your first contracts and bring in your first revenues. Obstacles will present themselves every step of the way.”