Akinola: More FinTechs, Banks Partnerships Underway

In this interview with Nosa Alekhuogie, the Director, Abeg Technologies, Mr. Ayo Akinola who is the headline sponsor of reality show, BBNAIJA 2021, talks about the emergence of Financial Technology (FinTech) innovation, the future of financial system in Nigeria, as well as other issues in the FinTech space. Excerpts:

FinTech players brought lots of innovations that made the financial space very competitive. What stands you out and what are you doing differently from the banks?

Banks are very good in what they do which is basically holding customers’ money in a safe space and helping customers move it around but for the future, we need to go beyond traditional methods, we need to think more of the users and customers than just the business and I think that’s what traditional banks don’t do.

Specifically for one, we’ve been able to digitise alms giving and it’s part of our culture as Nigerians to give alms. At every point in time, everybody is giving somebody something. We all do it on every level and it’s a favorite for some people. Also, we have made it a step easier to be able to spend money. You have your ATM cards, but what happens when they fail, those weekends when you go out, and when you try to pay but you can’t leave the place because it keeps declining or you want to do a transfer and they say they have to confirm from the manager? These are practical issues that we all face, but with Abeg you don’t have those problems anymore. Businesses don’t need to worry about confirmation of credit alerts ,customers don’t need to worry about the fear of being debited twice in a single financial transaction. So all those things are things of the past and those are some practical issues we have been able to solve with our solution. FinTech has always been a thing and it has always been there, it’s basically just financial technology and the banks have technology too but those things have always been sitting at the back end of the banks. But with the rise of new FinTech companies, they are bringing all those solutions to users themselves where they can do all those things without having to go and line up in the banks. So now with your phones, you can do things that people in the back end of banks are doing. I think we are just doing it faster, better than the traditional banks and we can move in ways that they can never move, that’s why you can’t see banks trying to compete with FinTech companies, maybe what they want to do is either partner or try to take down because they can’t do it.

Moving forward, we will see a lot of partnerships between these FinTechs and banks because the banks are needed. We will also see a lot of partnerships among FinTechs themselves because I believe collaboration is the new competitive advantage.

We have a vision for Abeg to not just be a tool but also a major financial tool in the ecosystem as a whole.

There is enough space for everyone to be honest and I sincerely believe that there will be a lot more collaborations than competitions in the next three to five years.

What is your projection of FinTechs in the next five years?

First of all, we are going to see a lot of investments in that space. Five years ago, raising money was very hard, people were skeptical about putting money into FinTech but we have had companies who have already set the pace, opened the doors, and exited the FinTech space in this country so we’ll have a lot more investments in that area over the next couple of years, we have more now than we had before.

Also, regulatory wise, we will have a lot more clarity because the FinTech space wasn’t as much regulated before as it is now.

We do question the regulation, but those are things that are needed to ensure that we are in line with the financial directives of the country. I believe the government is going to do a lot more in that space to make sure everything is in check, that’s what I see happening in the next three to five years. I also think we will see much more international companies coming to Nigeria and also, we going out of Nigeria. A lot of Nigerian companies will also be playing globally as opposed to playing just in Nigeria.

Cyber security and data protection is very important. How do you protect people’s information from cyber attacks?

To be able to play in this space, there is a level of protection that you need to have and to be honest, the highest level is the bank level of security systems. So, if you are a small FinTech company, security is the biggest thing you have to tackle and not everybody can do it easily but as I have said before, we have had experience with this for over five years and with that experience, we have put all that; Security, marketing, branding into this one product so yes, we do have bank level security and we are adding so many other things to make sure your profile on Abeg is completely secure. Regardless, everybody needs to be safe and careful.

Also, there are lots of things that are encrypted on the servers and anyone in the space will know that’s priority and for our engineers and company, that’s also priority.

We have taken that whole wealth of experience to make sure we are completely in line security wise.

How can people protect themselves from selfish investors who try to takeover the entire business of startups in the long run?

The first thing I’ll say is, if you don’t need to raise money, then don’t, if you can bootstrap all the way, then keep it that way.

The kind of investors that you are looking at are not just investors that have cash, because you need people that are what we call, your sponsor. A sponsor is someone that will hold your hand, take you, kick down doors that you cannot do. Apart from giving you cash, if you are not sitting down on the right table, you will be spending money outside the club. If you have the right investor, it has to be very strategic and not just financials.

So anybody trying to come into the space, should as much as possible try to get a lot of traction on their own and then you will have more bargaining power in terms of when you are trying to raise money. Many people get discouraged because they think they wouldn’t be able to get the money they need and also, so many people get too cocky due to over confidence and it doesn’t work that way. If you’ve been able to sit down and prove that the product is doing what it’s saying it will do, put it together, there are people willing to bet on not just the product but the team.

It’s important to get a good partnership going amongst yourself as a team, work on the product that solves a problem and then go for investors that are also sponsors.

Since the rise of FinTechs in Nigeria, there are fears that they are beginning to take over some financial services roles of the banks. Is this statement correct and what is your view on this?

This statement is not correct. FinTechs cannot take over the banks, banks still and will always exist. What we will have is a lot more collaborations between banks and fintechs. There have always been FinTechs, just that now, it is more consumer facing.

Do I see some FinTechs being bigger than banks? Definitely. There are already some FinTechs that are bigger than some of our commercial banks but will that take that bank space, probably not. We will see more partnerships because FinTechs will want to remain in the line at which they are going. Will there be more digital banks? Most definitely.

Nigeria is known to be a leading player in the digital space in Africa. Do you think we will achieve full digitalisation in the next five years, given that digital penetration is still very low in some parts of the country?

Five years?, definitely not, there is a lot of work to be done. As popular as some banks or products are, you will find out that if they mention the number of people that use it versus the number of people in Nigeria as a whole, you will be surprised. A lot of FinTechs still operate in bubbles. In five years, we will definitely be closer than we are today but definitely not anywhere near full. What can be done to achieve digitalisation is more inclusion, more FinTechs, more customer specific products, as there are lots of agency networks and agency banking happening outside. You see a woman that has a shop who is actually a human POS system or human ATM machine, you see that because a lot of people in that area don’t have access to apps. They go to her, we need a lot more of that and it’s happening a lot. A lot of FinTech products are becoming so simple that if you can use WhatsApp, you can use the products. They will grow to even become much easier. A lot of FinTechs will be doing this and there will be more digital penetration.

What advice do you have for startups looking to come into the FinTech space?

We are also a startup as we came onboard about a month ago. My advice will be to have a good team; you can never substitute or discount this.

If you have a great team and a working product, you will make it with a sprinkle of grace and luck here and there. I’ll want more startups to come onboard and they need to be more audacious. They should stop hiding and shouldn’t be afraid of regulations, because there are so many partnerships you could do to cover yourself even if you don’t have the financial capacity to stand on your own. There are so many ways to survive the first growth level. We need more startups not just in the FinTech space but in the medical field, transportation and every sector of the economy.

What is the correlation between FinTechs and Banks in terms of service delivery in the financial sector?

What has happened with the FinTech companies is that they are more consumer-centric. So, you as a user can take your app and do your investments yourself. You can put money and buy an investment, security or whatever it is. Before, you couldn’t do that, you had to got to a bank or company to do this, so now, FinTechs are just more consumer-centric. It helps banks as well because at the end of the day, the money still sits somewhere but there will always be that relationship between the two. Even when you have virtual banks, you might be looking at your app and you will see N50,000 there in words but it’s still actual money so there will always be that relationship between them.

Who are your target audience?

Primarily, generation Z (Gen Z) and the millennials are our target market. So, I’ll say between the ages of 20-45 years old. In that age bracket, you have different groups. There are equally older people who are equally tech savvy as well. Definitely, we are going to have a spill into the older generation and we are doing our best to make it as saturated as possible where you’ll be able to go to the market, buy fish, pay using your Abeg and the sellers will receive payment using Abeg as well. The goal is that, majority of your spending, you should be able to use Abeg to pay. If you go to Kenya, M-Pesa is widely used no matter what you are buying. In Ghana, you have MoMo. They have saturated into the economy so much that people who sell on the roadside will collect money with their MoMo or M-Pesa. Abeg is going to do the same and do it a lot better.

For more clarity, for a start, the people that are going to be making all of these payments, go out, buy all these things right now, are the millennials and Gen Z. The older people are more at home, you wouldn’t find them in the clubs. Those that have that spending power right now are the millennials. The Gen Z are coming up to meet them so, that bracket is our target market. Any other person that comes on board is most welcome to the party. We have to look at the bigger picture, in the next 10 years, who is going to have the spending power, who is going to be in control of the money, those are the people you have to look at and catch out for now.

Could you tell us about Abeg Technologies and how it works?

Abeg is a pair-to-pair (me to you, you to me) social payment solution that basically allows people request, send and receive money using their Abeg tags or their phone numbers without their account numbers. It’s the first financial service application (App) that is also social. It’s like mixing your cash app and Instagram. Imagine your Instagram handle being able to send money to another handle. It has that social element to it that we have taken advantage of. It has one of the most important features, which is the give away feature that allows brands and individuals engage with their fans and their users through giveaways. The way giveaways happen before now is that you go on Twitter or Instagram, tell them to do something and put in their account numbers. Then imagine doing this to a hundred people and there are a hundred winners, just imagine the selection process if you have to single them out one after the other. But with Abeg, something simple has been turned around, now we have digitised giving, brands or celebrities can give away to their fans and engage with them. So that little act of giving is something that people love. It’s one of the features we started with and so far, people love it.

We officially launched when the Big Brother Show started, which was about four weeks ago and we have had great feedbacks so far. We have close to a million users already.

It is an app that is deeply rooted in the Nigerian culture, every Nigerian says Abeg at least once a week, it’s a word that everybody knows and it means please or help me. The next phase for us is using Abeg to pay for services. So for example, you go to a supermarket, pharmacy or when using an Uber or Bolt, instead of doing transfers, having Automated Teller Machine (ATM) or Point of Sale (POS) issues, with Abeg, it’s seamless as I can send money to the businesses’ Abeg tag without the use of account numbers. This makes it easy, fast and cheaper because there is no cost to the person sending it. For businesses, it is the lowest transaction commission cost in the market. They pay more using POS and even transfers than using Abeg.

We are currently in partnership with Medplus pharmacy, film house cinemas, e.t.c and our goal is to hit at least a thousand businesses by the end of the year.

What are the challenges you have faced so far and how were you able to adapt?

So far so good, we have been able to deal with the challenges that came with growth. We launched with the Big Brother show, which is unarguably the biggest show in Africa. It was the best platform to go to bed with in terms of marketing. So the numbers and influx of people were crazy. Being a product that already got a lot of positive reviews, we grew super fast in a very short time. With this great responsibility, some technical issues came up that we needed to sort out engineering wise, and we had to suit up as well. These are basic platform challenges and luckily, nothing beyond our control has happened. These are issues that any technical company will and has faced. We have the best team and I can say that anywhere. So, yes, we were able to handle the issues that the growth brought about and we also had to grow fast internally in terms of talents and staff.