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In today’s scenario non-banks and new challenger banks are fueling the innovation and creating real value through their problem-solving approach to it. Many of the narratives of the industry’s success stories talk about growth, innovation, technology platforms, leadership, and the usage and scale of their digital and innovation hubs. Let’s look at how various companies identified the main problems their clients faced and constructed efficient solutions. It was not just the tech aspect they focused on, but also fostering the momentum that helped drive innovation forward and improve the proposed solutions.
Asia: Ant Financial
Ant Financial was founded in 2014 and has seen astonishing market capitalization in less than four years: an estimated $150 billion, which equals to the one of Citigroup and surpasses American Express and Goldman Sachs. The company emerged with the goal to build and develop the payment infrastructure required for transactions on marketplace platforms of Alibaba. Today, Ant Financial covers a substantial part of national, as well as international markets, with almost half a billion users alone on various Alibaba platforms. The company offered customers returns higher than Chinese banks and gave them an opportunity to make most use of idle cash balances. The real value of Ant Financial is in the created economic opportunities, financial access and a payments/financial services ecosystem that is supportive of micro and small businesses.
Africa: Mobile money
Mobile money enterprise in Arica grew larger than the banking system, reaching more users and processing a bigger volume of transactions. When they went beyond micropayments and began to serve institutional, government and public sectors, they gained access to more lucrative areas like cross-border remittances, loans and other financial services of the kind. Kenya, the largest economy in East Africa, was the pioneer of mobile money with $28.7 billion transacted over mobile platforms. Right behind it is Tanzania with $24.1 billion, which is followed by Uganda ($9.2 billion) and Rwanda ($1.5 billion).
A report published my KcKinsey in 2016, took a glance at the economic impact of digital finance along with mobile money payment services. The most valuable insight was that the continuous spread of digital finance could help people in emerging economies get access to financial services, which would have an overall positive impact on annual GDP.
Singapore: Grab Financial Group
Grab Financial Group, which is a Southeast Asia’s leading FinTech, presented its “Grow with Grab” roadmap in March 2019 with the launch of small-to-medium enterprise (SME) lending and micro-insurance for drivers in Singapore. The main goal is to provide a complete and comprehensive range of financial services in Southeast Asia for micro-entrepreneurs and small businesses. The services include post-paid and installment payment services as well as “Pay with GrabPay,” an online checkout payment method for online sellers.
Grab has taken advantage of the great opportunity to support entrepreneurs whose scale does not fully allow them to access the services of traditional financial institutions.
Despite the fact that small-to-medium enterprise contribute more than 50% of GDP in the Association of Southeast Asian Nations, for many of them business funding and financing remains the biggest challenge. Grab is there to challenge the existing order of things, brining financial services and products to the market at a more competitive price.
These examples of non-banks providing financial services are surely among the biggest success stories in the industry, as they have leveraged innovation and created propositions that tackle real pain points of the customers. This context gave them an opportunity to scale and raise their competitive advantage, growing larger than their competitors. FinTech companies succeed to provide true value when they think outside the box and look at business beyond its usual framework. It is not about seeking opportunities for yourself, but about creating them for your customers.