• Magdalena Gołębiewska

Global FinTech can learn from Emerging Markets!

Updated: Aug 7, 2019

There is no denying to the fact that there are lot of innovation that is happening in the financial services industry around the world, and a lot of them are happening in emerging markets, well, sometimes even frontier markets. A lot of economists still underestimate the value of those regions, and its potential of innovation power which is booming!


The industry is transforming through open architecture, digitisation, FinTech, electronic payments, open banking, blockchains, crypto, AI, robotics, IOT, DLT etc. (uff, used so many buzz worlds - sounds smart :)) to improve efficiency and create opportunities in markets of all sizes across the world. But in the markets where the traditional financial system isn’t really reached to many people to begin with, these innovations are more impactful and meaningful. I mean here emerging markets, markets which desperately try to catch up with developed ones, and bring better to their citizens.


The emerging markets have huge demographics that rely on a cash economy. Many people do not have access to financial services industry. But times are changing with some innovative fintech developments in these growth markets. As the concept of finance becoming invisible with every passing year, the entry points of the financial services need not to be the traditional touch points, such as bank accounts and loans, we need something different, something more suitable for cash and mobile oriented society. Something more suitable for people with lack of credit history and poor connectivity. For example: 


  1. Dopay, a fintech startup in Africa, is offering financial services to people who have jobs but no bank account. They do this through offering a cloud-based payroll management services to employers and providing each employee with a dopay card through which they can access their money everywhere. With innovative ways of financial inclusion catching up the emerging markets, there are lot the world can learn from them.

  2. A fintech start-up Banco Mare in Brazil reached out to largely underserved communities of favelas (slums) where the traditional branches hadn’t set up an office fearing violent crimes. Banco Mare tackled this issue by developing a blockchain infrastructure that allows growth with protection and transparency. Now, their blockchain-based digital platform serves more than 11 million favelas and offers various payments and transfer services through their mobile app, securely in a high-risk environment. Needless to say that fintech startups, like Banco Mare do have a potential to disrupt the traditional big banks. Banco Mare also lets their customers use their own cryptocurrency called ‘Palafita,’ which can be converted to local currency at 1:1 exchange rate. It gives them the kind of scalability to take their operation beyond borders, which the big banks have been fancying for decades!

  3. Mobile challenger banks? Do you think that N26 or Revolut were the first ones? Well, think again. We can see real innovation in m-Pesa in Africa, Alipay in China, and PayTM in India, and how it transformed payments landscapes through mobile platform.

  4. Something from China now, you know Alibaba. Why them? Well, they struggled with credit risk so they simply overcame the lack of reliable credit information about SME borrowers in China by evaluating transaction and payment data collected by Alipay, its proprietary payment system. This allowed the company to create a predictive model for evaluating an SME’s credit risk. Easy, simple - works!

  5. If we are talking about loans - another emerging regions: LatAm and India: 5.1. In India, nearly 50 million SMEs do not have access to formal credit. Fintech companies such as CapitalFloat use information collected from public sources, such as social media and government data, to offer financial institutions in India alternative solutions to assess a company’s creditworthiness. 5.2. In Latin America, a popular method used by fintech companies is to combine data collected from an SME’s electronic invoices and electronic tax filings to help banks assess the creditworthiness or risk of a loan.

  6. Since I am a blockchain fan, evangelist or call it whatever you want - I have to add company based on DLT.This time - Leaf. What are they doing? They are using advanced tech to serve the most vulnerable! Leaf helps refugees in Rwanda safely transfer their assets across borders and in multiple currencies, using blockchain technology that minimises the attention of thieves and malicious border guards. Powered by Stellar, an open-source payment network, Leaf’s mobile platform enables refugees to deposit their money at a mobile money agent based in their home country, send funds to Leaf for safeguarding with a transparent rate, and retrieve the assets in a new mobile money wallet using a linked biometric identity once they settle into a new country, solving at least one of the many hurdles facing refugees today.

  7. And... last but not least. DO not forget that access to the internet is problematic in Africa. And here we have Hover who addressed that issue. Let's start from the problem - according to GSMA, by 2020 there will be 3.3 billion smartphones and around 1 billion mobile money accounts in emerging markets. However, the current suite of solutions built on mobile money “rails” remains limited, often because it takes 6–18 months for a startup to integrate a single mobile money service with their app. Hover offers a technology solution that reduces development time to 1 hour for all mobile money services and it can be used as a lightweight version of the internet that could bring the next billion people online. Hover’s proprietary and patent-pending technology can allow in-app mobile payments even for customers without data plans as it enables mobile developers to turn an existing communications protocol, USSD, into an invisible transport layer.

I could probably find a lot more examples, but it is already 5 minutes read so lets get to the point. Large banks have a lot of key takeaways from the lessons of FinTechs trends in the emerging markets. Some banks understood this paradigm shift and keep their focus on these trends. For example, Dopay was selected for Barclays accelerator programme, Standard Charted banks joined Equichain – a capital market infrastructure platform using Blockchain.


As the financial services business model changes, it is time for banks to embrace the new shift. As in 100 years from now, banking will still be around in some form, but banks may not be.

Source with adjustments: HCLTech and own research.

Contact me at m.golebiewska@icloud.com or leave your email below and let's stay in tuoch. 

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