Mr. Michael Kent is Chief Executive Officer and Founder of Azimo, a global financial technology player. Kent, who was in Nigeria recently, spoke with Emma Okonji on the role of FinTech firms in driving the mobile money business. Excerpts:
What informed your decision to visit the Nigerian mobile money market at this time?
I visit Nigeria often and I am always excited to be in the cities of Nigeria where there are lots of entrepreneurs who are using technology to drive businesses. But on this trip, I needed to expand the Azimo business in Nigeria, because Nigeria is a big market for our kind of business. I am in Nigeria to meet with partners and new customers. A lot of African people and Nigerians do use the Azimo platform to send money back home, but we want to have more people on board, hence my visit to talk with the banks, payment service providers and some technology solution providers that are in the country, including the eCommerce operators.
You play in the FinTech space where most financial institutions are jittery over the perceived disruption that FinTechs are bringing to the industry. What is your take on this?
The interesting thing about the financial services industry technology is that it has been very slow to adopt globally. Banks have been slow to adopt the solutions, particularly in Africa, even though the benefits are huge, occasioned by the high percentage of mobile phone penetration in Africa. The lives of many have been transformed using social media and supported by mobile phone devices that are used for connectivity. There are lots of people that are either underserved or unserved by the banks and the financial institutions must move fast to adopt the kind of technology that will bring an all inclusive financial services to their customers.
How will you describe the growth of mobile money in Nigeria and Africa?
To have a good growth prospect for the mobile money industry in Nigeria and Africa, I think we need more technologies that will develop the ecosystem. So, we need more of investments that are capital intensive. In Nigeria and most countries in Africa, we are beginning to see big investors investing in the mobile money space and this is a good development for the mobile money industry in the African continent. International investors are also investing in this space. Again, the growth of mobile money in Nigeria and Africa, will depend largely on the regulator. The Central Bank of Nigeria (CBN), for instance, is doing a good job in the area of mobile money growth in Nigeria. Better regulation will increase competition and boost innovation in the mobile money industry. Regulators in Africa should be open to new technologies like blockchain and cryptocurrency, which I think are beginning to thrive in Nigeria. Then of course we need people that have the talent to develop new technology solutions and Nigeria is doing well in this regard of talented people to develop apps and solutions that will address issues in the FinTech space. We have seen a healthy banking sector in Nigeria over the years and they need technology solution from FinTech to further grow their business.
Government must encourage and support young innovators that are willing to use technology to change the narrative in the banking sector.
Since you alluded to the fact that global adoption rate in mobile money is still slow, what could be done to speed up the process?
We should remind ourselves that Nigeria is one of the first mobile internet countries in the world, which of course has given rise to mobile phone penetration in the country. I have no doubt that the smartphone penetration will be higher in Nigeria as cost of technology solutions drops over time. One of the ways to speed up the adoption rate is to increase the speed of internet connectivity in the country and deepen broadband penetration across the country. The private sector should not wait for the government to develop the infrastructure that will drive development in the mobile money sector of the Nigerian economy. They should come out and be more innovative with technology solutions that will enhance speed of connectivity in a very seamless manner.
What do you suggest could be done to further boost development in the mobile money space?
The financial business is changing, and the banks and the insurance companies are beginning to realise this. What they need do is to collaborate with fintechs to further grow their business. The fintechs on the other hand, must continue to innovate to develop new solutions that will address a whole lot of issues in the financial sector. The banks should also support the fintechs because they are majorly small businesses that need the support of the banks and the insurance companies to survive. The bigger fintech companies must also encourage and support the smaller ones that are mostly start-ups and SMEs. The bottom line is how to serve customers better.
Why should the financial service operators see FinTech as a threat to their business?
Initially the financial sector service operators saw us as a threat to their business, but all that fear is gone, and they are beginning to see the importance of fintechs in their daily business. The truth is that there is always competition in any given market and business owners need solutions that will make them serve their customers better and gain customers’ confidence. So, what we do as fintechs is to provide them with better products and solutions that will make them remain competitive in their business. We may sound as threat to them, but we are their biggest opportunity to remain in business, while serving their customers better.
What have the fintechs done to address the perception?
We are working closely with other fintech players for more business collaboration, especially now that banks are becoming bigger in their operations and they need solutions that will keep their customers on top of their business.
We have seen this collaboration in Europe and America and I think we can replicate that in Nigeria. I see a situation in the next five to 10 years time, where the word fintech will cease to exist because every financial services company would have to be a technology company, developing solutions and products that will best handle customers’ interest.
How do you think the insecurity in the financial services space, where customers are often defrauded online can be addressed?
Addressing security issues is one of our biggest concerns because we deal with families and individuals that transfer money to their loved ones and families using our platform. Family and money are the most important things that should be protected through proper regulation. There are lots of regulation in our kind of business and we do well to abide by such regulations always. We even went a step further to run our own test around, our infrastructure and system to ensure that no one has unauthorised access to our system. So, we are very security conscious and we invest in security to protect the business of our customers. The entire industry has to be security conscious and protect customers from being defrauded.
What are some of the identified challenges faced by fintech players and how can they be addressed?
The first challenge is about consumer belief and trust and that is why it is important for us to secure our platform and build customers’ trust and confidence in our business. Another challenge we see in our kind of business is shortage of skills. We do not have enough skilled people that understand the fintech business of developing quality solutions. We need our school system to train students that can fit into the fintech space as soon as they graduate from the universities and Polytechnics. Nigeria is a big market for our kind of business and we need skilled people to help us service the Nigerian market better. We also have the challenge of having the right regulations with the regulators since our business and service offerings cut across different counties with different policies and regulations.
There is a new move in Nigeria to regulate those that use technology to disrupt existing platforms. Do you envisage any form of threat in the planned regulation?
The truth is that different regulators have different roles and purposes, but the first thing that a regulator must do is to look out for the customers’ interest especially when money is involved. The regulator should not be particular about whether certain network operators is making more money than others, because that is not their job. The regulator should have a broaden regulatory intent and purposes in carrying its regulatory functions and ensure that customers get good value from the services offered by operators. I will like to advise the Nigeria regulator to ensure there is stability in the country’s financial system, making sure that Nigeria has enough dollars and its banks are open for business.
How will you compare mobile money growth between developed countries such as China, Indian, South Korea, and Japan, with developing countries like Nigeria, Kenya and Ghana?
In Africa, I see growth in mobile money in countries like Kenya, where M-Pesa is currently driving the mobile money business. In Nigeria also, the adoption rate of mobile money is gradually on the rise as more people use mobile money for their daily transactions, rather than going to the banking hall, which many have described as a complete waste of time. Although we still have huge volume of cash in the hands of Nigerians, but I think the awareness on mobile money transaction is there and such should be sustained to bring more people into the financial inclusion system. In developed countries, the spread of mobile money is high and the speed of adoption is equally high.
What is the focus of Azimo, and what value is it adding to the global financial industry space?
Azimo is a global player in the fintech space with a global platform that enables people to send money through transfer from country to country. Over 50 million Nigerians in the diaspora use our platform to transfer money back to Nigeria and they have been enjoying the service we render to them and to our numerous customers.
In terms of value added, Azimo has an app that allows people to seamlessly transfer money in a most safe and convenient manner, thus adding value to individual life styles and businesses. We offer digital solutions to our customers across the globe, including Nigeria and our solution is significantly cheaper than other solution being offered by other brands. The app enables customers to save over 78 per cent on transactions and the speed of delivery is very fast as transactions could be done in seconds. Again, the app has been demystified to allow for easy use. The solution is therefore adding value to the global digital economy, where people are beginning to see the value of moving away from physical cash transaction to digital and electronic cash transaction.
What are the strategies your firm has adopted to increase its market penetration in Nigeria and other African countries?
The most powerful way for us to get more customers is through referrals, when an existing customer use the social media to invite friends and families and colleagues to try the Azimo service offerings. From available statistics, several Nigerians make use of different mobile money platforms to send money home, but over 40 per cent of the Nigerian population that uses the mobile money platform, are invited by friends and relations to be part of the mobile money transactions. So, for us at Azimo, we try to develop products that are easy to use and that the people cherish so much. We are technology company and one of Europe’s leading FinTech and we will continue to innovate on our products and solutions to make financial transactions a lot easier.
Recently Azimo secured $20 million seed funding. How has the fund impacted on your business?
So far, we have raised about $50 million in growing the business, and the $20 million dollars is the last money we needed to raise to further grow the business. By the time we invest this money into our operations, I believe we will be profitable within a short period of time. The interesting thing for us is that we have several investors who are willing to fund our business because of the potential of the business.