“In the future, banking in Africa will be done by banks.”
That is the view of John Staley, chief officer for finance, innovation and technology at Kenya’s Equity Bank, who was speaking on a panel at the AHUB event in Cape Town yesterday.
“If you look at where most fintechs are playing, they are in payments and loans,” Staley said. “Payments is a race to zero. Amazon and Google want to do payments for free. In Kenya, Lipa na M-Pesa is free. There is no money to be made out of pure payments.”
Meanwhile, in loans, he said the only way to make money is to have a float, counting out startups.
“The likes of M-KOPA Solar have a 100 per cent rate, which is too high. So you need to have a float. And the only way you can have a float is if you are a bank,” Staley said.
“We have to partner with fintech startups. We have woken up. I must have five fintech startups a week asking to partner with us. But ultimately if you want to do financial services you have to be a bank.”
These sentiments were echoed in part by Ian Merrington, chief executive officer (CEO) of the Cape Innovation and Technology Initiative (CiTi), who said most fintech startups were viewed by banks as opportunities rather than competitors.
“At Money 2020 earlier this year in Copenhagen the view was that banks would continue to dominate the ecosystem, but they would bring in the innovation,” he said.
Wim van der Beek, founding partner of Goodwell Investments, took a different view, saying he would challenge banks and other incumbents on whether there is anything for African fintech startups to disrupt.
“The majority of Africa is unbanked. Where fintechs are interesting is where they can provide infrastructure that isn’t there at the moment,” he said.
“There are a large number of startups creating infrastructure that is simply not there. It is going to be a land grab. The telecoms have the customers, the banks have the licences, but there are a whole suite of services that are going to come into the market from startups.”
Van der Beek said around one-third of startups in Africa have some aspect of fintech to them, fixing a problem banks have not solved.
“There’s a lot that’s happening that is going to surprise us,” he said.
