South African-born Dave van Niekerk is the founder and CEO of MyBucks, a fast-growing African Fintech company that successfully delivers seamless financial services to banked and ‘unbanked’ consumers alike using next-generation technological platforms.
MyBucks, which is listed on the Frankfurt Stock Exchange, has a broad portfolio of virtual banking products which includes lending, insurance and banking, and is supported by services such as mobile banking, credit reports with credit education features, financial budgeting, and emergency cover through insurance. The company operates in 12 African countries and has offered loans to over 700,000 customers.
I caught up with him recently and we talked about how FinTech will play a role in Africa’s next phase of growth, and MyBucks future plans.
What pivoted you towards FinTech as an enterprise?
Having managed and grown banking and financial institutions the old fashioned way with “bricks not clicks”, the inspiration behind MyBucks was both to capitalize on the growing Financial Technology industry with the goal of providing financially inclusive products digitally, to both the formal sector and to the previously unbanked or under banked across Africa. Financial inclusion is a unique challenge and would simply not be viable in the long term without technological advances. The investment and social impact opportunity in creating MyBucks was, and remains wholly worthwhile.
Your company recently launched its IPO on the Frankfurt Stock Exchange. Concurrently, as the ‘Brexit’ fallout continues, it looks as though Berlin may be stepping up to replace London as Europe’s top FinTech capital. What was the motivation to list publically, why Germany and where do you see MyBucks going from here with regard to European integration?
Long before ‘Brexit’, we viewed Germany as an ideal financial hub for launching our Initial Public Offering. The nation has a reputation for strong governance, which will in turn create a measurable and transparent valuation of our company, metrics that investors internationally will look for when making a decision on an outfit operating within an industry as innovative as FinTech.
Great Britain has been well regarded as perhaps a leading FinTech hub in Europe (with this week’s ‘FinTech Week’ in London serving as a symbolic reminder), however amidst ‘Brexit’ aftershocks, opportunity lies in the stability we continue to see in Europe’s economic hub, Germany.
However, no matter the location, public listings allow organisations like ours to acquire with greater efficiency banking licenses in all of the countries in which we operate and seek to operate, expediting the expansion ambitions of our unique portfolio, which includes mobile banking, lending and insurance throughout Pan-African markets and today, integrated in to Poland, Spain and in future, no doubt further in to Europe.
What are some of the challenges of FinTech as a viable enterprise on the continent of Africa? How do you circumvent or tackle those challenges to ensure profitability and customer service?
Regulation in Africa / Licensing in Africa can be challenging and the time and requirements vary from country to country and often are quite onerous.
Statistically, according to the 2016 Legatum Africa Prosperity Report, nations abiding by rule of law, for example, have seen direct, dramatic returns in GDP ratio and FinTech companies such as ours accordingly emphasise adherence to such regulations as an incentive for our model’s successful integration.
There remain long-ingrained bureaucratic challenges that FinTech companies in developed markets have been able to largely circumvent. However in Africa, FinTech is very much regulated the same way traditional banks and financial institutions are. I foresee the easing of regulatory restrictions over time, those that have encumbered companies such as ours in-past, given the opportunity for both financial inclusion for a given citizenry, together with governmental ability to properly effect taxation from the data provided, based on greater metrics as to one’s income.
Ultimately, Africa leads in ‘sector convergence’, with smartphone usage and mobile application software downloads increasing on a daily basis. This has directly benefitted the financial services we offer, those we continue to shape and revitalise as technology advances.
There is no question that financial ‘exclusion’, though perhaps not deliberate, has a history of fostering disillusionment in Africa. There is also no question that today, access to brick and mortar banking institutions are not the solution for rural-dwelling Africans.
One method we are particularly proud of to break the ongoing cycle of poverty due to lack of fundamental access and accountable aid is via our unprecedented collaboration with global Non-Government Organisation (NGO) Opportunity International. This partnership is truly revolutionary, as the conclusion of the acquisition of four banks and two microfinance institutions from Opportunity International will add Ghana, Tanzania and Mozambique to MyBucks’ country portfolio, increasing our customer base to 1.5 million. While beneficial for us, importantly, this will allow MyBucks far greater access to funding in local currencies, significantly assisting our enhanced consumer base and offering a vastly wider degree of financial inclusion services.
Through our partnership with Opportunity International as but an example, FinTech – indeed MyBucks – will be able to promote sustainable and responsible lending practices that allow for meaningful corporate social responsibility (CSR) projects to be funded, realized and sustain in accountable fashion.
There has been much excitement around the proprietary software of FinCloud. What makes this system particularly unique?
MyBucks is the first, and currently only FinTech business in Africa to make use of credit technology, supported by an in-house Artificial Intelligence (AI) team and cutting edge software we’ve labeled FinCloud, used to determine the credit history and accordingly creditworthiness of consumers.
In FinTech, there is always a slight degree of risk and in Africa, where many have been excluded from the financial sector historically, one often starts relatively from scratch.
Conversely, the MyBucks Tech team has developed a cloud-based proprietary software solution that is both an interface to our customers as well as to our internal loan management enterprise. FinCloud is able to properly access our customers’ bank statements and bank accounts at application date, to better assess creditworthiness and assist the collection process. Hence, FinCloud, together with our internally developed self-learning credit decision and scoring system, works to continuously attain customer behavioral patterns from previous loans and is able to very accurately predict a customer’s probability of default for a particular product at any given time.
FinCloud’s underlying algorithms take a number of factors into account, such as behavioral data, transactional data and employment information. The system then assigns a unique credit score and determines a probability of default, as mentioned, which in turn drives a unique credit offering to the client, by adjusting the loan amount, term and interest rate.
This type of Artificial Intelligence ultimately and dramatically assuages concern on an industry built on return on investment. We see greater and greater tech-driven sectoral convergence boons allowing for lesser risk in implementing loans in new markets with efficiency.
Where do you see the company five years from now? How about FinTech as an industry itself?
The advent of ‘Big Data’ and its deployment throughout Africa will allow companies such as MyBucks to identify particular needs and demands in certain African markets, continuing our mantra of adaptability while allowing for reliable transactions and the expansion of our model even further across the continent.
In five years, I can predict greater integration, an increase to our service portfolio in-step with technological achievement and a wider net of partnerships that will drive financial inclusion across Africa.
FinTech is a chief proponent of this; the industry will dramatically reshape the worldwide financial sector and we welcome being a part of this process, this precedent in globalization as a force for good.