Fintech needs a human touch…
Yesterday, I had the privilege to speak at the Africa Fintech Summit in Washington DC. I spoke on the above topic. I hope the video of my talk will be publicized. Below is the essence of what I shared…
The problems Fintech is trying to solve are not new…they have existed for millennia and will continue to exist. The two core problems are
a) how to exchange value — whether you are selling tomatoes or looking to by a Patek Philippe…two people both have something of value the other person wants — how do we exchange that value.
b) simplify financial services — how do we make services easier to use and more accessible?
The solutions to these problems will always change. In 5000 BC metal objects were introduced as a form of money. The earliest known paper money was from China in 960. It was not until 1862 the US issued paper money. In 2000, Paypal introduced digital wallets. This has led to other similar wallets — AliPay, M-Pesa, Paga…Innovation and the “unreasonable man or woman” (ala George Bernard Shaw quote) will continue to drive different new solutions to the problems Fintech aims to solve over time (see timeline at the end).
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” George Bernard Shaw
Transitioning from cash to digital payments is happening around the world. I now don’t need to even bring out my credit card to pay for a ride in Washington DC, I simply use Apple Pay and pay with my American Express Card. However, despite all the innovation, cash is still very much King around the world. 94% of all transactions in Africa are done in hard cold cash. Germany, which is even further advanced still has 80% of transactions in cash!
What would it take to make the transition to digital? As I said in an op-ed in Newsweek,
Ultimately, what drives how people to choose to pay for everyday purchases is not defined not by one thing — like what form it takes, or who accepts it — but by how well it succeeds in bringing together two very basic human needs: faith and flexibility.
As the good book says, Faith comes by hearing — and hearing is from other people. I started using PayPal because a friend told me about it and I found it convenient. My trust developed when I tried taking my money out and I got it in my bank account 3 days later as promised. I’ve never looked back.
It takes a Human Touch to make the transition from cash to digital. We need an army of men and women who introduce and encourage others to perform transactions digitally.
Africa has been heralded for leapfrogging financial technology, especially in mobile money. However, new financial technology has not come out of Africa (yet). Rather, the real innovation are the business models mobile money operators are using.
Mobile-money operators have succeeded because they have blended technology into an existing culture and ecosystem that was “offline” and engendered trust of consumers.
That culture uses cash. Thus the introduction of an “agent” who collects cash and then transacts digitally is a bridge to the process of building faith and trust.
At Paga we are laser focused on leveraging this principle of the Human Touch to transition Nigerians, and eventually Africans, to digital payments. Paga exists to make it easy for people to send and receive money and to deliver financial services to the mass market.
At the core of our business is a distribution network for financial services — we call it an agent network. Agents are mom and pop stores where people can go in to get financial services rendered to them — our Human Touch. Most importantly, the agents share with their communities the benefits of using Paga and drive adoption of the service. The trust in our system comes first from trust in the agent. Then the assurance that the service works as promised. This is the blending of technology into an existing culture that is “offline” which I referred to above.
Customers of Paga can use Paga directly to send money to anyone using their mobile phone number, pay for goods and services, and access financial services — savings, loans etc. These can be done on *242# on any mobile network, mypaga.com, our mobile apps, or at any Paga agent. We are only 5 years into our journey and are making very good progress — 8.2m users on our platform process over 2m transactions a month worth over $131m (March 2018 numbers). We’ve processed over $3b in transaction value from 48m transactions and growing at a very fast clip — the human touch approach is working…
We have a long way to end the reign of cash in the world, but we are on our way. I fundamentally believe that in our life time we will have at least one country go 100% cashless. My bet is that it would happen by 2025.
