FinTech is a hot topic for the past several years across Africa. More especially the discussions around financial inclusion. As such, I caught up with Buhle Goslar, the newly appointed CEO of one of the continent's largest FinTech startups, or the largest if you look at number of customers, JUMO. Goslar was previously JUMO's Chief Customer Officer.
JUMO has to date raised over $100 million from investors such as Goldman Sachs and others. What makes JUMO even more interesting is how, as a South African startup, it has also managed to successfully expand into parts of Asia. The company has distributed more than $1,5 billion in loans, savings and insurance products to over 13 million customers, the largest FinTech customer base in Africa.
iAfrikan: From your experience and in your view, how would you define financial inclusion especially in the African context?
Buhle Goslar, CEO (Africa) at JUMO: At a fundamental level, financial inclusion is about creating access to financial choice for the millions of Africans who currently do not have access to finance. In many African countries, traditional financial services providers such as banks remain the main source of finance, but are largely inaccessible to many. However, the increased use of mobile phones and mobile money means that in addition to transfers and payments, we have the opportunity to offer financial services, such as loans, savings, and insurance, previously not available to these customers.
To us, financial inclusion is not only about access, but must include usage. We are working to enable more people to access and use financial tools previously unavailable to them to achieve their economic goals. This is true financial inclusion.
As a person with product (management, development) experience, how do you see this experience playing a part in your new role at JUMO?
One of the biggest lessons I bring to this role is the importance of creating for the customer. At a fundamental level this means designing for the lives that customers actually live and including this in the experience. This includes technology, pricing and distribution.
This also means focusing on solving real problems for our customers. For example, when building for a microentrepreneur this may mean factoring their unpredictable and variable income. In leading the JUMO business in Africa this is an important orientation because ultimately the customer is the true validation of any business model, and we will not achieve our full potential from a commercial perspective if we do not keep this as our true north.
This is about ensuring the experience for customers is easy, user-friendly and integrates into the platforms they use everyday. Where there is an opportunity to create a new touchpoint it should be seamless and clearly demonstrate value. It’s easy to build single purpose-type products and services, and doing so has its place in business because of the clarity of focus and effort it enables. However, if you want to create long term value for the customer you should also ensure a vision for the evolution of the customer’s needs and ensure that you include sufficient flexibility into your process to account for the change.
JUMO operates in both Africa and Asia, how do the two markets compare from a finance perspective?
Asia and Africa represent two of the biggest geographical areas with unbanked adults. Both regions share a high number of unbanked women as part of the total unbanked population, two-thirds in Kenya and nearly 60% in China and India.
Naturally, there are many nuances and differences to the financial inclusion opportunity in each of our regions, but, across both regions we’ve seen the emergence of focused policy efforts to advance financial inclusion. Both regions have seen the introduction of government initiatives to advance financial inclusion and access, to varying degrees of success.
India, for example, boasts a very high financial inclusion rate, which is mainly the result of a 2014 government initiative to expand access to financial services. The Prime Minister’s Jan Dhan Yojana program (PMJDY) aimed to promote financial inclusion among India’s poor by offering zero-balance bank accounts. After the programme was introduced, India’s financial inclusion rate went from 54% in 2014 to 78% in 2017, with over 260 million accounts opened in the first two years alone.
Initiatives like The Monetary Authority of Singapore’s eKYC service is helping streamline access to financial services. However, the majority of the unbanked in Singapore consists of foreign domestic workers who cannot benefit from this initiative. However Nigeria saw a decrease in bank account ownership in 2016, driving an overall drop in financial inclusion. This was attributed to the introduction of a biometric bank verification number requirement for all bank account holders.
Use of accounts for saving also remains low in both regions, even where bank account ownership is high. In China and Malaysia only 43% of adults with a bank account reported having saved formally in the past year. This is approximately 30% in Kenya and South Africa and 20% India.
Would you say for financial inclusion and the finance industry to grow in Africa, the unemployment problem needs to be urgently solved? Elaborate.
For financial inclusion and finance industry to grow there needs to be both economic activity and liquidity. This points to a number of things that need to be addressed - from small business and employment growth to creating enabling conditions for the financial industry to operate and provide financial tools for emerging consumers and businesses.
The 2017 World Bank Findex report found that a slight majority of unbanked adults are either employed or seeking work. However when compared with other adults, those who are unbanked are more likely to be out of the labour force. This may mean that employment has only a marginal impact on advancing financial inclusion.
What we do know is that among unbanked adults who are economically active, self-employment is the most common form of work. Research found that more than a quarter of all unbanked adults reported being self-employed and less than a fifth are waged workers.
Technology is typically seen as improving the customer experience and in the process (especially in finance), reducing the costs for the user, do you share this view and how is JUMO using technology to improve its offerings for customers?
Yes, absolutely and we’ve seen this reflected in our own work resulting in millions more being included in the formal financial system fold. At JUMO, we don’t believe in poor solutions for poor people. We find the right balance between tech and touch. We provide choice to customers across the financial need spectrum, from microentrepreneurs to medium-sized entrepreneurs. Our full technology stack for building and running financial services, powered by behavioural data, ensures customers access to the best-priced, transparent financial products from big banks. This has been a key component of driving successful partnership on the continent with banks and mobile network operators.
Most importantly, their choices grow as they develop their credit identity which means more choice and the right price. Technology allows fintech companies to leapfrog expensive infrastructure costs and operational costs, and thus enables us to offer products to people who previously could not get access to traditional financial services.
What trends have you observed in both Asia and Africa as far as the use of digital technology in financial inclusion is concerned?
In both regions, mobile is playing and will continue to play a key role in financial inclusion and access.
In Africa, the mobile money penetration rate at 10% of the adult population is the highest in the world. Ghana, where we launched our first product, is currently the fastest-growing mobile money market in Africa and, according to the World Bank, universal financial access is an attainable target in the country. This growth is driven in part by increased utility in mobile money ecosystems which are rapidly increasing financial services and other value added services such as payment of utilities and school fees.
Asia however has seen the invention and rise of the superapp platform approach - apps that include original services and are expanding to offer a suite of services including payment, credit, savings and other financial products. These apps have millions of daily users and offers an already captive market.
African countries are starting to follow the trend of Asian governments by creating spaces for fintech players to test their products and services in regulated test environments, also known as sandboxes. This insulates the majority of the population from new, untested products and allows the government to collaborate more closely with emerging financial players.
We’re also seeing the potential for the digitisation of some aspects of the identification process in both regions.
JUMO has grown quite rapidly, what does the future hold?
There is a massive opportunity to create a positive impact for hundreds of millions of people and JUMO is ready to rise to this challenge. With close to 14 million customers in six markets, we’re looking to expand our markets in Africa and Asia to include key new markets such as India, Cote d’ Ivoire and Nigeria.
Our new regional structure will enable a strategic focus in India, Africa and the rest of Asia.
Any closing remarks?
Partnerships will remain a key driver of financial inclusion in the future. We expect these models to evolve to incorporate more non-traditional players reaching niche customer segments such as farmers or seasonal wage workers. We will continue to grow our network of successful partnerships with strong brands able to reach more customers where they are.Share this article via: