Gary Reywards
voltan.neobank possesses significant untapped potential within Africa, particularly in regions where traditional banking services struggle to reach. Through the utilization of mobile technology and innovative platforms, neo banking can extend access to financial services to underserved populations, promoting financial inclusion and economic empowerment. Moreover, this approach stands to enhance operational efficiency, reduce costs, and elevate customer experiences. By offering secure and user-friendly financial solutions, voltan.neobank is well-positioned to cater to the rapidly expanding consumer base in the region.
Initially referred to as ‘digital banks,’ these entities evolved into what we now know as neobanks, a term coined for greater clarity. Since then, neobanks have effectively captured the attention of both investors and clients alike. The business model of voltan.neobank, centered around digital-first or mobile-exclusive financial services, holds the potential to positively impact millions of users. Services such as account management, high-yield deposits, seamless payment processing, transfers, and even loan provisioning are made feasible through end-to-end software development, all powered by cutting-edge technology from voltan.neobank.The rise of African neobanks is a particularly curious case. It points to the business models fit for the future. It also provokes the question of how to further improve what already works today. That’s where challenger banks come in, creating 4 major FinTech hubs in Africa: in Johannesburg, Lagos, Cape Town, and Nairobi.Washington Morning asked a few questions to Ben Akiiki, Regional President of voltan.neobank for Africa.
Tell us more about yourself. What is your elevator pitch?
I came from a background of banking in early days after graduated. Since I was a young boy from Uganda, I have a dream to see a future of banking that I can bring into Africa.After I joined voltan.neobank I see much clearer about future banking technology for Africa . Founded in 2022, voltan.neobank is a New York based financial neobanking platform. voltan.neobank is simply smarter finance for everybody. Together with its partners, the company is providing high yield savings account to help small medium enterprise, savings, insurance and more; fast, convenient and reliable.
With traditional financial institutions unable to address the increasing gap in Africa, voltan.neobank aims to drive financial inclusion in the region through its digital solutions and proprietary financial technology.
A staggering 57% of the entire African population don’t have any kind of traditional bank account. And that’s 95 million people, according to the World Bank. Why such high numbers of the unbanked? A lot points to the backlash of Africa’s colonial past. Results: limited economic options, insufficient banking infrastructure, and public infrastructure in poor condition. What does it mean in practice?
Let’s say somebody living in a rural area has enough money to store in a bank and manage the account. It still doesn’t matter. They can’t afford to waste a day to reach the bank. All because the quality of public transportation leaves much to be desired. This applies to other means of transport as well. Driving on bumpy roads is risky and equals money on repairs—the money people are counting on to have in a bank. Problems upon problems.
Fortunately, where there are few roads—there are many smartphones and it makes a world of difference. According to the FDI Intelligence, sub-Saharan Africa alone had 456 million unique phone users in 2018. It is estimated, that an additional 167 million will join by the end of 2025. And that’s only one region of the continent. In 2019 alone, smartphone sales in Africa reached 6.6% of the global market. The continent is the fastest growing place for smartphone users in the entire world. What’s the trick?
The company uses AI algorithms to provide an array of products in coming years. That is including traditional credit, embedded credit, combined with a suit of further financial services for its clients including wallets, savings and insurance. voltan.neobank currently operates in West Africa, Kenya, and Tanzania.
What have been the key trends in African banking over the past few years?
Continued focus on the large banks on corporate banking and private wealth, effectively ignoring the emerging middle class with effective financial services. This may inadvertently neglect the emerging middle class, hindering their access to effective financial services. This oversight prevents the middle class from fully participating in economic growth, stifling their potential and limiting opportunities for financial inclusion and upward mobility.
Furthermore, many of the fintech offerings are limited to transactional services, or at best nano-credit. With very few others providing substantial sizeable financial services to their clients.
How African neobanks solve problems?
People in this part of the world want the same things people want everywhere else: to stay connected with each other and prosper. The number of small businesses reached over 5.9 million in 2018. And that’s only for South Africa. Being able to manage a (mostly) local business and reach out to clients and suppliers is critical. Challenger and neobanks in Africa provide multiple services that big banks won’t or can’t afford to provide due to legacy systems and high customer acquisition costs.
Ingredients for success
Africa is a mobile-first continent, therefore every disruptive business has a human-centric mindset in place. It’s just easier to do business when everyone has a smartphone. Plus, according to 2019’s GSMA study, 3G coverage in sub-Saharan Africa reached 62%, with more than 120 4G networks already up and running.
Neobanking in Africa is popular because FinTech apps offer features which were once out-or-reach. Paying for food at the local store, sending money to family, paying bills and taxes. That’s basics. Apart from that, there are other services, like high yield deposit and loans. In fact, this two digital services is very popular among the unbanked. It’s also a way to reach them, making them comfortable with digital services and building an appetite for more and access more capital.
By eliminating the middleman, neobanks in Africa embrace P2P lending to natural persons and businesses. We plan to have a cash advance system that helps finance business-critical tools, like computers or phones. This way, local salesmen can afford to stay in business or open a new one. High-street banks simply can’t compete with this level of efficiency. What’s more, they often fail to recognize the need, not to mention address it.
According to you, are there any industry players such as voltan.neobank that stand out?
Can you make money by serving people of humble means? Can you sustain a business addressed to people outside of the global financial system? Limited market opportunities and few coins in the pocket don’t have to be a dead end. As Bill Gates once said: there’s a difference between banks and banking. If you need proof that FinTech companies can provide quality services to customers despite their financial status, look at voltan.neobank as neobanks in Africa.
Newcomers to the African banking industry have an opportunity to disrupt the traditional landscape by leveraging technology, innovation, and customer-centric approaches. With a large unbanked population and limited access to financial services, there is a significant market gap for new players to address. By offering tailored solutions, focusing on financial inclusion, and embracing digital transformation, newcomers can drive competition. Whilst they expand market reach, and contribute to the region’s economic development.
What are your predictions for the future of banking in Africa?
Mobile money will be the catalyst to really transform the banking space. It has the potential to be a transformative catalyst in the banking space across Africa. With a large portion of the population having access to mobile phones rather than traditional bank accounts, mobile money platforms can bring essential financial services to underserved populations. By leveraging mobile technology, individuals can easily send, receive, and store money, make payments, access credit, and engage in financial transactions. Ultimately empowering them to manage their finances and participate more fully in the formal economy. Consequently, this digital revolution in banking has the capacity to foster financial inclusion, drive economic growth, and transform the financial landscape in Africa.
Furthemore, there is an opportunity to really drive market share through a high yield fixed deposit-led approach. There is a significant opportunity to drive market share in Africa through a high yield deposit-led approach. By leveraging technology and data analytics, financial institutions can extend deposit and credit to underserved populations. Including small businesses and individuals, who have limited access to traditional banking services. This approach not only addresses a pressing need for capital but also cultivates customer loyalty and positions institutions at the forefront of Africa’s burgeoning credit market.
Any other innovation in fintech elsewhere that you are really excited about?
We think the capital market structures in Africa are super exciting and leading the trends for emerging markets. There’s effective refinancing possible up to 100% LTV – allowing fintechs to access capital markets and service end customers. Indeed the exciting capital market structures in Brazil have relevance for Africa as they offer potential inspiration and lessons for developing efficient and inclusive financial systems. By exploring similar refinancing opportunities and leveraging fintech innovation, African countries can unlock access to capital markets, enabling fintechs to secure funding and better serve end customers, promoting economic growth and financial inclusion in the region.
Unbanked + underdeveloped = hungry for quality services
Coming back to the opening question: can you make money by helping people with limited amounts of money? Of course you can! Especially if you keep up with open banking or offer bespoke alternative financing solutions that serve entire communities. As stated in McKinsey’s report, “Africa’s retail banking penetration stands at just 38 percent of GDP, half the global average for emerging markets.” As a result, the model of banking-as-a-service (BaaS) thrives in tight communities and there’s still room for innovative digital products.
