This week on FinTech Profile, we talk to Dare Okoudjou, founder and CEO of leading Pan-African fintech company MFS Africa. Operating the largest digital payments hub on the continent, the MFS Hub is connected to over 170 million mobile wallets in Sub-Saharan Africa, offering unparalleled reach for financial services providers to bring simple and secure mobile financial services to un- and under-banked customers.
Who are you and what’s your background?
My name is Dare Okoudjou and I’m the founder and CEO of MFS Africa. Prior to founding MFS Africa, I worked at MTN Group, where I developed their mobile payment strategy and led its implementation across MTN Operations in 21 countries across Africa and the Middle East.
In my role at MTN, I saw the potential for mobile money to meet the needs of un- and underbanked clients across the continent. I am originally from Benin, and have studied and lived in Morocco, France, and South Africa. I have been on both sides of the remittance experience, and I understand both the frustrations in the process and the urgency of the need.
I started my career as a management consultant with PricewaterhouseCoopers in Paris. I hold a MSc. in Telecom Engineering from ENST-Paris and a MBA from INSEAD.
What is your job title and what are your general responsibilities?
As the founder and CEO of MFS Africa, it is my responsibility to define and deliver on a strategy that meets our core objectives – creating a viable, high-growth business while dramatically reducing costs for remittances and other cross-border payments.
In particular that means ensuring we keep driving our product development, commercial, and technological strategies forward to meet the needs of our clients. As we grow from a small start-up to an established company, that also means ensuring we have the internal processes and controls in place so that we can continue to grow, and most importantly, the right team to make that happen.
As CEO the job changes from day to day, from keeping investors updated on our plans and progress to evaluating potential strategic partnerships to engaging with long-standing clients to align on vision and discuss performance. It adds up to a lot of time on the phone, on the plane, and in front of a whiteboard. It’s certainly never boring!
Can you give us an overview of your business?
MFS Africa is a leading Pan-African fintech company, operating the largest digital payments hub on the continent. The MFS Hub connects over 170 million mobile wallets in Sub-Saharan Africa, creating the largest dedicated mobile money network on the continent, offering unparalleled reach for financial services providers.
One of the core value propositions of the MFS Hub is connecting African consumers to each other, businesses and the global digital economy, and, conversely, connecting international merchants, internet players, and other services providers to African mobile wallet users.
The MFS Hub also connects banks, insurance companies and other financial institutions who can take advantage of the scale we provide and the possibilities of the mobile channel to create innovative products for underserved markets. Some pan-African banks are already taking advantage of this.
Tell us how you are funded.
To date we have been funded by angel investors and family offices, however we are in the process of raising our B round from institutional investors.
Why did you start the company? To solve what problems?
When I was working at MTN I realised that there was a big problem that needed to be solved. Interoperability.
I helped MTN to launch mobile money services in 21 markets. Many of these services have been highly successful helping to bring financial services to millions of previously unbanked individuals.
However, to truly drive financial inclusion and create the infrastructure required to propel the African digital economy more needed to be done.
The MTN mobile money services, like almost all mobile money services across the continent, were closed loop. Only people using that service can transact with each other. Even a person using an MTN service in say Ghana couldn’t transact with a person in Rwanda for example.
36 markets in Sub-Saharan Africa feature two or more mobile money services but users cannot send money to another person on another network in their country, nor to a person in another country.
Fundamentally, for financial systems to work, there needs to be utility so consumers can pay anyone, anywhere, in exactly the same way, and scale to provide the reach that consumers, in an increasingly global world, need. And this requires interoperability.
Without interoperability, mobile operator customers cannot send money to another consumer on another network in their country, nor to a person in another country. Mobile money providers seeking to provide services ranging from airtime top-ups to micro-insurance to the un- and under-banked, and merchants who want to allow consumers to pay using their mobile wallet, need a bilateral agreement with each and every mobile money network. Consumers can’t transact across borders and networks, mobile money providers and merchants can’t scale services and boost reach, and the broader economic benefit of continent wide payment system remains unfulfilled. Everyone loses out.
So we decided to solve this problem by connecting all the mobile wallets in Africa to our MFS Hub. The MFS Hub allows these service providers to facilitate transactions across networks, across borders and across currencies via a single API ensuring compliance with all necessary regulations.
Who are your target customers? What’s your revenue model?
By connecting with a variety of companies, the MFS Hub is developing an ecosystem that allows mobile operators, merchants, banks and a variety of other service providers to dramatically improve the reach and user experience of e-commerce and m-commerce services.
Our primary customers are mobile network operators; money transfer operators, banks, and other financial institutions; and e-commerce players. In essence, we serve to connect those customers’ end users to one another, in the case of person-to-person payments, or to the services themselves, in the case of e-commerce, financial services such as lending or insurance offerings, etc.
To give a concrete example, one of our best-known customers is MTN. For their operation in Rwanda, we enable MTN Rwanda customers to send and receive person-to-person transfers to and from mobile money schemes in neighbouring countries, and from money transfer operators serving the diaspora. Another service we offer MTN Rwanda is payment processing to the pay TV service Canal+, which is another client of ours.
Fundamentally, our model is to connect wallet schemes to services that provide value to end users, while letting our B2B clients drive the interface and user experience. Our revenue model is simple – in general we operate on a revenue share or straight termination fee basis with these partners.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
The main obstacle to reaching scale in fintech in Africa at the moment is regulation. This is one area where Africa’s fragmentation is especially pronounced and difficult.
Fundamentally, what we aim to do through the MFS Hub is make borders matter less when it comes to who can pay whom, buy from whom, and sell to whom. And central banks are concerned, and rightly so, with what occurs within their borders, and with the risks that can come with introducing payments that originate from or terminate to jurisdictions that those central banks do not oversee.
What is your message for the larger players in the Finance industry?
Digital commerce in Africa is open for business, rapidly growing and increasingly lucrative.
The opportunity of ecommerce is still in infancy and Sub-Saharan Africa currently represents a small ecommerce market, but strong double-digit growth is expected in the coming years with revenue set to surpass US$100 billion in 2020.
A pan-continent payment network is essential to fuelling the digital economy. However, the principal entry point for digital payments in Africa remains the mobile agent network. Without accessing that network, your fintech play is limited to those few customers who are already connected to digital payments through banks or card systems.
MFS Africa is creating a single, ubiquitous network to facilitate transactions between consumers and merchants across borders and countries, reducing costs, dramatically improving convenience and increasing choice for the end consumer.
What phone are you carrying and why?
I use an iPhone 6; I’m not a strong Apple partisan but I do appreciate the attention to design in their products. However, throughout the day I regularly interact with the classic, reliable feature phones offered by Nokia and Alcatel as we test and demo our USSD-optimised services.
Where do you get your industry news from?
I read Mobile Money Africa and Let’s Talk Payments daily, and Africa Capital Digest, Mobile World Live, and Mondato’s newsletters weekly or monthly.
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
Faisal Khan for payments news and analysis @babushka99
Rebecca Enonchong for Africa tech @africatechie
Tayo Oviosu for Africa fintech specifically and great commentary on the Nigeria scene in particular @oviosu
Can you suggest the name of an Angel Investor or VC that might be interested in being profiled?
Partech Ventures – Tidjane Deme and Cyril Collon
What’s the best FinTech product or service you’ve seen recently?
I’m a big fan of Nomanini, a Cape Town based company focusing on what is really at the core of financial services access in Africa – the merchant/agent counter. As much as we in the fintech industry talk about the “mobile” part – apps, algorithms, and devices – and the “money” part – cryptocurrencies, vouchers, etc. – the real engine and foundation of mobile money and all fintech innovation in Africa is the agent network. The agent is the point at which most transactions are digitised. Nomanini focuses on this part of the value chain and offers merchants in the informal sector a variety of services they can provide to clients through a simple point of sale device.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
New relationships will form. Consumers will not expect everything from one provider, unlike the traditional financial services world in which one gets all financial services from a single bank or even a single mobile money network. The point of convergence will rather be the mobile device itself, through which the user will interact with multiple accounts and service providers.
Therefore consumers will start to expect interoperability as a standard feature from the financial service providers they use. There is no reason for a given service to only be available to users of one wallet or payment system, just like it would be ridiculous for a business to accept client calls from only one network.
To that end, I think we’ll start to see more and more open APIs. I think we will also start to see a clearer differentiation of fintech “middleware” providers. In Africa in particular, currently there are some very big players offering the wallet infrastructure itself with selected additional functionality, and a wide market of smaller players offering specific verticals – for instance, lending or saving or bill payment. I think we will see more differentiation as players specialise and race to “win” specific spaces rather than try to do everything.
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