In a competitive and ever-evolving industry, African banks continue to draw on new technological innovations in order to put their services ahead of the pack.
One of the most recent of these innovations is the development of financial technology (FinTech), a line of business which is based on using software to provide financial services. FinTech companies, (normally start-ups) are shaking up the traditional financial system, using technology and software to make payment processes easier, increase security and make banking more affordable.
In a world that revolves around technology, large banks are sitting up and taking notice of these FinTech innovators. In Africa, banks are increasingly calling on FinTech companies to provide services based around technology.
In 2013, South Africans Warren Bond and David Milligan realised that there was an opportunity to connect financial institutions to market-ready FinTech solutions from all over the world. Before this, Milligan had been running innovative business units in a large bank for more than 10 years, while Bond had successfully launched and licensed technologies to banks.
“Both of them experienced first-hand how banks can benefit from working with smaller, more innovative FinTech firms. We realised that a global innovation platform was needed to assist innovators reach the right financial institutions. On the other hand, banks need consistent and clear approaches for sourcing and evaluating possible innovations,” explains Matchi marketing head Catherine Miller.
Matchi is an online matchmaking platform which provides leading banks and insurance companies (known in Matchi terms as “Buyers”) with access to a curated online showcase of the world’s best FinTech innovations. Buyers are able to search, view and connect with innovators directly to establish collaborative relationships and explore new business opportunities.
Having rocketed to success, the company has regular contact with senior decision makers in more than 70 major banks and insurance companies across all six habitable continents.
Buyer members also have the opportunity to run an Innovation Challenge, which is one of the quickest ways to identify and source targeted market-ready solutions. The challenges give innovators from all over the world the option to respond directly to the buyer’s particular area of interest.
Financial institutions can also opt to be “Sponsors”, which secure the first viewing rights to new innovations within their geographical region. Buyers and Sponsors are both guided by Matchi analysts to connect them with the right innovations.
Standard Bank and Liberty are the two Matchi Sponsors for the Sub-Saharan Africa region, while many other large banks in Africa are Buyer members. Massive attention has also been gleaned from innovators.
“We have had huge interest and support from the African FinTech community, with hundreds of high quality FinTech innovations available to view on our platform. Several South African FinTech firms have already won or been finalists in our global challenges,” says Miller.
By being part of the platform, innovators cut down drastically on marketing costs, while Matchi has partnered with KPMG to offer them the chance to get solutions implemented in specific regions.
Paul Steenkamp, head of innovation capability at Standard Bank, says that the banking giant has engaged the local and international FinTech community extensively through their Matchi sponsorship.
“The scale and reach of big banks are incredibly valuable. On the other hand, FinTech start-ups have agility and capabilities that banks don’t have. When you bring these these things together, one plus one equals three. Banks and FinTech companies can achieve a lot more by working together,” Steenkamp says.
As proof of the importance of FinTech start-ups, Standard Bank developed their SnapScan app – which allows users to make in-store payments with their mobile phones – with South African-based FinTech group FireID.
Thousands of FinTech innovators are springing up across Africa, creating an entire new industry which is bringing in billions of dollars.
According to the African Tech Startups Funding Report 2015 – compiled by tech startup analysts Disrupt Africa – FinTech firms received the second highest startup funding of any industry in Africa in 2015, after solar power.
Disrupt Africa found that US$185.7 million was invested in tech companies, securing 29.6% of the total funds invested in African start-ups.
Matchi recently formed a strategic partnership with a large fintech conference in Nairobi, where 30 innovators will be showcasing their innovations to attending financial institutions in May 2016.
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