Written by Victoria, from the Bloggers Association of Kenya.
Kenya is the birthplace of some of the most revolutionary FinTech ideas. The FinTech ecosystem is fast growing in the country.
Investopedia defines the term ‘FinTech’ as, ‘a portmanteau of financial technology that describes an emerging financial services sector in the 21st century. Originally, the term applied to technology applied to the back-end of established consumer and trade financial institutions. Since the end of the first decade of the 21st century, the term has expanded to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment and even crypto-currencies like bitcoin.’
These are discussions held online concerning the Kenya Internet Governance Forum by Kenya ICT Action Network on the topic ‘FinTech Ecosystems in Kenya’.
Fintech seems to be technical but because we are all involved in it one way or another, we definitely have lessons and opinions on what needs to be done.
Is the business environment in Kenya conducive for FinTech business?
Our internet penetration levels are high compared other African states. Keeping in mind how mobile money has also picked up, there is definitely a conducive environment for FinTech.
A new law needs to be enacted to enable Africa’s first virtual bank to be born in Kenya. Kenya is the birthplace of Mpesa. Where we account for 10% of all global mobile money transactions. Yet we have a policy and regulatory regime that is still steeped in the physical cash economy.
Today, we do not visit banks anymore, we do not line up at Kenya Power; Nairobi Water or other utilities to pay our bills; we do not send money via Rift Valley Express, Coast Bus or Posta; we even pay our taxes virtually and we use Uber to travel within the city. We only need to simply use Mpesa or Pesalink to pay for these services.
However, the Kenyan FinTech environment needed to make it conducive is simply archaic from a regulatory point of view. For example, getting a mobile wallet approved by the regulator is somewhat a long process.
We need to consolidate our gains by opening up the policy and regulatory framework to make it easy and fast to move to the next phase of this Fintech Innovation.
Kenya should, therefore, have an enabling policy environment or framework that will foster growth in this sector because what we are currently doing is playing in the periphery.
Disruption is as much a form of social evolution as it is of technological improvements. We are all evolving socially and/or otherwise.
What is the experience of companies scaling & deploying FinTech to other countries in the region?
Collaboration in the FinTech industry unlocks digital growth because Fintech innovation opens up new opportunities. FinTech has helped drive tremendous advances across the financial services ecosystem through reshaping the status quo in a complex and highly regulated industry. Fintech companies are delivering more tailored, convenient and affordable solutions for underserved populations and communities.
Neither start-ups nor traditional financial institutions will be able to independently provide the range of specialised products and services that are needed to address the increasingly fragmented financial lives of 21st-century individuals and businesses.
In order to effectively navigate an increasingly complex financial system and meet changing customer expectations, companies today must build upon and extend their own unique areas of expertise by pursuing opportunities to partner.
However, with collaboration, new customer expectations are drawing traditional institutions out of their comfort zones; the ability to scale remains a challenge for FinTech start-ups and the global economy is in a constant state of uncertainty.
Fintech startups should remember, successful partnerships put the customer first.
Have banks finally caught on FinTech with their solutions?
Banks have not really caught up but they are trying to blend their products with technological solutions. This wake-up call may have occurred when interest rates were capped. It is however quite clear banks will lead to this new product and not the FinTechs as much touted.
Kenyan banks seem to be playing a catch-up game to Mpesa in the area of mobile banking with their innovative product Pesalink. Banks are actually not charging any transaction costs, unlike Mpesa, when you transfer money between accounts in the same bank. One can even buy more M-AKIBA bonds on PesaLink than when you use Mpesa.
How will bitcoins & blockchain technology affect the market?
Cryptocurrencies such as bitcoin have started being hyped by block chain enthusiasts. However, when CBK will recognise it, it’s true effect will be seen.
The transformation of the financial services industry is top-of-mind for everyone in the field and blockchain might be the hottest topic in the rapidly changing world of Fintech. Nevertheless, how can this technology really help financial firms? A report from World Economic Forum takes a pragmatic approach to highlight more on this question.
When you converse with people in the Bitcoin community, there is only one thing mentioned – as was during the dot.com era, “Bitcoin is here and will change everything“. What all those Crypto-pundits fail to remember or read about is, at the beginning of the dot.com boom there was Netscape, Yahoo, AOL, Lycos, Alsta, Vista among others. The outcome yielded different top players: Amazon, Google and Salesforce.
Again, as with the dot.com era, the larger public does not clearly understand what is happening. While the media mulls over Bitcoin and gives credence to a slew of people proclaiming a “decentralised network that no one will own” to a naive public and convince them to dump millions into “ICO”, there is something else happening. Considering Facebook, Apple, Amazon, Microsoft and Google, do you think it’s a coincidence they are major deployments for many block chain networks?
As with previous players, the winners are already taking in massive rewards because they are already hooked into an existing Information Technology and Banking Infrastructure. Currently, investments are only flowing into blockchain infrastructure that must be enterprise grade. This is similar to when the Internet did not make IT departments irrelevant and blockchain will not replace IT departments. What will change is the speed and types of skillset needed in it. There will be no immediate shift to everything block chain – there will be long periods of co-existing and integration with existing IT systems. However, block chain will lead to a strong surge in cloud adoption.
The consequence of block chain among consumers will be most felt in Infrastructure were developments relating to Identity, Privacy and Security are taking shape.
Bitcoin, therefore, does not have a fur fetching future
Written by Victoria, from http://bake.or.ke