Digital Ecosystems in Africa (pt2)

This article is divided into two parts. Read part 1

In my previous article, I have introduced the concept of digital ecosystems or GAFA/BAT and how they can deeply change the financial services landscape in Africa. Their entry into the African market is more a question of when than if.

So, how can the entire financial services ecosystem prepare? The first lesson they I’ve learned working in Innovation it’s a bit counterintuitive: You don’t need (and shouldn’t) reinvent the wheel. And, as you read through, you will notice that everything that it is discussed in this “how-to” are things that you already have within your organization or that are out there waiting for you to grab them.

Let’s start:

  1. Partner up with fintech to gain new perspectives

Leverage new technologies and business models to reach unserved customers, which would not have been possible without user and merchant information. Keep an eye out for inclusive startups that are gaining relevance in the financial service industry: Like Bima, a mobile microinsurance provider that in that last few years have reached 26 million low-income customers in more than 15 countries or Lidya a platform for business lending in emerging markets that process around 100 data points to make a credit decision instead of using the traditional collateral asked by traditional bank institutions.
Digital Ecosystems in Africa (pt2)

Use their innovative business models and fresh-thinking to drive customer insights that you can use to develop new products with true market-fit.

But how to partner up? Learn from who has done it before

Across the globe, in China, there are several examples of fruitful collaborations between traditional banks and digital services. Take the Postal Savings Bank of China (PSBC) – China’s largest lender, as an example – it is deepening its cooperation with Ant Financial and Tencent in the internet and mobile finance. As a starting point, PSBC is partnering with Ant’s MYbank to improve the speed and convenience of its account opening process. Or look at the Shanghai-based P2P (person-to-person) lender China Rapid Finance (CRF) collaboration with China Construction Bank to create a P2P platform providing investors access to CRF’s P2P offerings via the bank.[1]

Digital Ecosystems in Africa (pt2)

Through such collaborations, incumbents are able to reach a new segment of unbanked customers, which would not have been possible without the online banking capabilities of these new ventures.


  1. Start looking to other customer segments like MSMEs

When these ecosystems enter Africa, MSME (micro, small and medium enterprises) will have for a first time an opportunity to easily start selling on-line. In fact, some young and tech-savvy entrepreneurs are already doing it: They sell their goods through Twitter, Facebook or WhatsApp and are sourcing new and affordable products in Alibaba that can make their businesses stand out from the crowd.

Digital Ecosystems in Africa (pt2)

Source: FIBR/BFA research project in Superplatforms: How will merchants benefit from e-commerce in Africa?

Setting shop in an e-commerce platform is relatively easy, but for merchants to strive they will need easy access to credit to develop their endeavor as they will need to buy more stock and diversify their goods’ portfolio. Merchants already feel the need for credit in the offline world: they often struggle with low stock, paying wages or acquiring new stores’ sites that would allow scaling their business. This need is clear when we look at the latest IFC study: Currently, there’s a $100B (yes, that’s billion with a b, not a typo) credit gap across Africa for MSME alone.  On the other hand, Ant Financial, the financial service arm of Alibaba, alone planned to disburse $150B in microloans to merchants in 2017 in China. This strategy will allow merchants to acquire what they need to expand their sales through e-commerce platforms and continuously use them.


Tweak your product’s value propositions

Customers will follow MSME whenever they go as they are the beating heart of consumer shopping in Africa. Digital ecosystems take advantage of this as they are multi-sided platforms which means they are of value to one group of customers only if the other group of customers are also present, putting it simply: once MSME start using one of these ecosystems, consumers will follow them and vice versa: if consumers start using Alibaba or any other platform to cater their needs: shopping, payments, mobile top-ups or even credit, MSME will follow them because that’s where their customers are.

Tweaking your value proposition to appeal to new segments, like underbanked consumers and MSME will mean that when the time comes, consumers will have all of their financial needs accounted for and will be able to enjoy all the perks of these platforms without needing to subscribe to their financial products.


Financial services and alike need to start looking at these huge and unattended customer segments and adapt their current value propositions to make sure that they stay relevant.


  1. Embrace data and follow it where it leads you

Super platforms create ecosystems, which means that they have expanded their core business in such a way that they are able to cater to virtually every consumer need. Take a look at this diagram from Ant financial’ s ecosystem:

Digital Ecosystems in Africa (pt2)

The result? A huge stream of customer data daily flows into these super-platforms. They hook the consumer in by anticipating what they may need based on his browsing, shopping and payment history.

Data can help dramatically improve a customer’s journey and that’s what these ecosystems have been doing: They just follow the data.

Financial service providers when holding on to legacy structures will not take advantage of the full potential of data in a customer lifecycle. Start by looking at your existing data: customer transactions, behavior and engagement data are already being generated on a daily basis. However, most organizations in Africa lack an effective way of capturing it or even when it’s capture it’s underutilized – it remains in its respective departments or it isn’t even analyzed. When you start analyzing and sharing within the entire organization, you will begin to notice patterns and these patterns will be the starting point to build new and profitable products.


Embrace data and follow where it goes.


As I said at the beginning of this article, you don’t need to reinvent the wheel to start preparing for digital ecosystems – by collaborating with other players in the ecosystem, learning from fellow colleagues and by leveraging existing in-house knowledge and customer data, traditional financial service providers will have the chance to propel their business models and products to the next decade.

[1]The rise of Chinese Fintech

How have you been preparing for the new era of digital ecosystems in Africa?

This article is divided into two parts. Read part 1


Papersoft - Maria Zuzarte

Exploring how innovation and human-centered tech are crucial for financial and digital inclusion in Africa. Tech and digital savvy powered by curiosity. At Papersoft, I define compelling value propositions and provide comprehensive understanding on complex problems, co-creating the future steps that get ideas into market.

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Maria Zuzarte

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