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Lessons from Equity Bank and Finserve: How Banks can Work Closely with Fintechs to Spur Growth 

Moving from the traditional Telco’s and banks to an agile startup is not any easy task, but Jack Ngare, Managing Director of FinServe, seems to bridge that gap effortlessly, speaking about his aspirations to be a truly Pan-African fintech and the importance of collaboration in the industry.  In fact, there are few who are in a better position to discuss how traditional banks can better work with innovative Fintech’s than Jack, who spun out FinServe from behemoth Equity Bank just last year.

  • The East African fintech space is very fragmented, let alone all of Africa.  Do you think this has stunted the proliferation of Pan-African companies?

Yes, the African fintech space has been fragmented because of the lack of evolution. Since the introduction of P2P payments, African fintech businesses have mainly been focusing on this specific problem.

However, there is a need and great opportunity for fintech companies to address the core development issues on the continent. For example, Kenya’s largest industry is agriculture, so how can fintech improve this industry?  The issues of customers as well as merchants for understanding the pitfalls in the use of P2P payments calls for the need to resolve discrepancies in addressing the use cases alongside the necessity to pinpoint the use cases with additional investments of time and energy.

  • You just created the Jenga Payment Gateway to support payment processing.  How is Jenga different and how does it help SME’s grow?

Fragmented payments are a roadblock in the improvement of the African fintech space. We were able to capitalize on this insufficiency by developing Jenga to support payment processing. Jenga helps SMEs in their growth expansion through East and Central Africa by removing restrictions on payments across borders and allows businesses to focus on their core business activities. Since we’re associated with a bank, we can also use this data to provide other value-add services, such as loans.

  • Tell me more about your R&D process. How do you choose the types of products you want to develop? Do you think about from a Kenyan, East African, or Pan-African Perspective?

Our R&D process is dedicated to new products and services which could appeal to the diverse range of customers that we have acquired over the years. Our core question is: “What is the impact that a possible product could have on the consumer?”. We try to anticipate the demand for the product, its features, and functionalities, possible use case scenarios of the product. Then, we think about value add. We also consider cloud dependency, preferences for partnership (versus building on own), and whether this is core. We aim at ensuring that our products can perform well in different markets such as Kenyan, East African as well as Pan-African domains.

  • As a leader in the African Fintech space, what advice do you have for Fintech’s that want to collaborate with banks? How about banks wanting to innovate?

My advice for fintechs who want to enter into collaborations with banks is to maintain a symbiotic relationship. Fintechs can capitalize on the banking infrastructure while banks can leverage the additional consumer base from fintechs. Banks will always have a place in the system, which is being the store of value.  However, banks may not always be able to innovate, so they must collaborate with Fintechs to bring in those external changes.

Even neo-banks usually start as collaborations and look at them today! The risk to step away from the traditional structure of banks and develop collaborations can, in turn, improve the capacities of the banks and fintechs as well as contribute valuable insights for the development of new products and services.

  • How do you scale technology in the East African market?

The scalability of technology is a prominent issue in the financial industry. We need to scale down before we scale up. The scaling down of new technology and innovative technology products for smaller use cases is dependent on various factors. The necessity of strategic competency in crucial responsibilities for CTO’s and CFO’s is essential for ensuring that the average person could afford the payments despite inefficiencies due to the massive expenditures in the industry.

I would also like to comment on the significance of product management to ensure that the customer base is captivated by the product and service offerings. This would provide the opportunity for an increase in the number of people transitioning towards the use of tech in various smaller use cases. The scaling down of technology for smaller use cases is also dependent on the user. We could not be doing it all! The consumers have their bit to do in learning the use of tech for the tiniest of transactions, and this can be accomplished effectively only by the inclination of consumers to learn more about the application of new technology. An understanding of the perspective of consumers on the structure, functionalities and use cases of new tech as well as ensuring a customer-focused development of technology can prove wonders in accomplishing scalability of new tech for smaller use cases.                

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