Expert Interview with Adedeji Olowe: Fintech in Africa & Open Banking
Fintech is showing what is possible when you are not shackled by legacy thoughts. The traditional players talk about fintech disruptions a lot but their actions say otherwise.
Adedeji Olowe is a top expert on African fintech. The CEO of Trium Limited - an African venture builder company and founded Open Banking Nigeria. His deep knowledge of the African fintech scene has made him one of the top voices being sort after. In conversation with Edition, he discusses the African fintech market, what's exciting about it and where it's heading.
Enjoy the interview.
Edition: Exploring the area of FinTech in Africa, what do you think are the main differences in the emergence of FinTech across various countries?
Every country is unique, and the uniqueness has driven needs and regulations tailored for each of them. This means the evolution of fintech within each country would be to meet those needs
Edition: How is FinTech influencing the financial services industry landscape, and how can traditional financial players embrace the rise of FinTech companies?
Fintech is showing what is possible when you are not shackled by legacy thoughts. Mind you, legacy thought is not a function of the age of industry members, instead it has to do with the ability to think differently as many fintech leaders are not spring chickens. However, I sincerely doubt that traditional players can embrace fintech, at least not in superficial ways, as their ways of life are steeped with the traditional DNA. The traditional banking DNA cannot do fintech
Edition: How can banks disrupt and reinvent themselves and turn digital into a positive asset in our new digital area?
It will probably happen when smaller digital banks become big and come of age or when larger banks start attracting senior executives with fintech DNA. However, the current leaderships of most traditional banks may try as much as they could, but their professional upbringing may have created an inclination that is anathema to the fast pace and digital nature of fintechs
Edition: Is the financial sector taking Fintech disrupters seriously?
The traditional players talk about fintech disruptions a lot but their actions say otherwise. It’s hard to believe they are taking fintech seriously.
Edition: How do you think the FinTech market will be affected by the various regulations and policies – from CBN to SEC?
Impact would be positive and negative in different dimensions. But let’s focus on the positives. The ongoing open banking standard development by the CBN would create a boost for fintech while the licensing regime that SEC has developed is also creating credibility for the invest-tech segment.
Edition: Let’s talk about Open Banking. How can Open Banking help financial inclusion?
It simply aids the super agents, who are going to the last miles of peri-urban and rural areas to easily integrate backward and open accounts for the millions of excluded Nigerians.
Edition: What are the key opportunities and challenges you foresee in terms of Open Banking?
As far as opportunities go, it would help reduce financial exclusion, improve access to credit and create a better savings culture. Cost of financial transactions will also be reduced. Challenges are more in terms of participant maturity - many of the banks still struggle to understand API driven banking. Customer trust is also a challenge to be reckoned with. Lastly, regulatory compliance may pose difficulties for fintechs who don’t understand that rules and regulations are for a reason.
Edition: As a leader, what legislation are you putting or have out in place as you lead Open Banking in Africa?
Frankly, the focus has been more on Nigeria; if we can get that right, it can serve as a model for similar African countries.
Edition: Do you think the use of blockchain and cryptocurrencies can help financial inclusion?
No. I don’t think so. Because the challenge of financial inclusion is about access and not which technology does what.
Edition: Some experts believe that cryptocurrencies are payment solutions of the future. And that in 5-10 years, such currencies will already be widely used to make payments. What’s your opinion on such forecasts?
Truth be told, I’m a crypto skeptic. My opinions are biased. I would rather look, learn, than jump into something I’m not entirely sure if I would look stupid doing or saying in 5 years time
Edition: It’s known that the CBN is about to release its own cryptocurrency and have already scheduled to do so in October 2021. Previously, it forced tech companies like Buycoins to stop trading in Nigeria and that banks should not allow account holders to do so from their accounts. What changed? Can the CBN sustain this type of innovation? Should they remain as regulators creating better policies for operators and consumers?
The jury is yet to make a call on the success of CBDC. As far as eNaira is concerned, it may be a solution in search of a problem. But then, I’m not an expert on crypto so I thread carefully with my crypto opinions.
Edition: In your opinion, where will development go from here – towards universal smartphones (which work as mPOS-terminals and crypto smartphones, have online banking with Face ID and fingerprint recognition, allow you to withdraw cash without a card) OR towards nanotechnology and semi-integrated technology like implementing chips under the skin or using smart contact lenses?
A lot of buzzwords packed into this question. While I’m very poor at seeing the future, I can bet it won’t be as you are asking
Edition: Some emerging and sometimes large, tech companies are using use their huge user base to release their own financial solutions. Talk about ‘embedded finance’. Some regulators, especially the banking sector, believe that such moves threaten the banking system's stability and could even lead to a crisis. What is your opinion on this?
When a large player, with a large customer base and customer trust, dive into financial services, especially without a solid knowledge and governance and risk guardrails, it doesn’t usually end well. I support regulators to err on the side of caution.
Edition: Do you think the world will ever give up using plastic cards and if so, any idea when?
I can bet a $1b that it would happen but can’t be sure when, maybe in 10 - 15 years. But once it starts, the demise would be rapid and they could be gone completely within 3 years.
Edition: Regarding everything you said before, who, in your opinion, influences payment trends the most: customers, businesses or governments?
They all influence significantly but I think customers and SMEs have a better sway than the government. It always start with the customers and individual owned small businesses
Edition: So, fintech is booming in Africa as per an article on The Economist, despite a weak economy. Will it last? What’s driving this trend?
I believe it would last because fintechs are creating the new economy, stronger but still within the weaker economic ecosystem
Edition: What was your “A-ha!” moment that made you realise you needed to be an investor and made the pivot?
When many of the companies I mentored, at their formative stages and vulnerable moments, started minting valuations. It means my process works and hey, let’s find more winners.
Edition: Looking back on your experience, do you have any advice for founders on product development?
They should find a passionate anchor customer and solve real problems even if for free. The experience of working with a real customer is worth more than it’s weight in gold
Edition: Do you have any advice on raising startup capital based on your experiences as an investor?
If you are going to be a tech startup, make sure that
You have a tech co-founder; without one you are one big risk at the mercy of fickle engineers
Your MVP works; most African investors don’t put money into experiments
Have an anchor customer; signifies to investors that you can sell your products
Have some traction; same as above
Edition: What is next for you?
I ask myself that sometimes
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