The co-founder of Flutterwave, Iyinoluwa Aboyeji, in the first part of the exclusive interview with Financialtechnology and eMagineTV, shared his thoughts on the role fintech. Excerpts:
Why did you quit your first love, Edutech? Were you overwhelmed with the challenges of running Andela?
I have always been in the education industry. I started out eight years ago building technology solutions. While I was in Andela, I gradually began to understand that talent is not enough. The model for monetizing software in Nigeria simply bore down to two things: it is either you find an employer who is going to pay you, or you build a series of solutions that you sell. However, there is nothing like building a business out of software simply by being an engineer.
I wanted to build technology that could enable that because at the end of the day, we are talking about how technology is transforming things in Nigeria. The key to that value proposition is that there has to be an incentive for the people building technology so that they can create wealth for themselves and for their family by doing so.
Flutterwave was my way of bringing the payment and fintech ecosystem to a pure application layer. So that it becomes possible for us to have developers building big business without having multiple meeting with bank executives. The only way to do that is to share fintech infrastructure.
Those who regulate fintech are far more astute and capable than those who regulate education. They are forward thinking people. There should be more visionaries in the regulation of the education space. The Central Bank of Nigeria [CBN] sees itself as enablers not enemies of fintech. The CBN is an enabler that protects the consumers. I do not think that education regulation has the mission mindset that appears like that.
At Flutterwave, we are building a shared technology and infrastructure for the industry. We believe that closed infrastructure will not help the industry. We are building a platform for all institutions that are trying to build payment into their value chain and provide a platform that we can all innovate; build technology, and infrastructure that is safe for the consumers, the ecosystem and flexible enough for everybody to use.
Can you benchmark Edutech and Fintech in terms of regulatory advancement?
Talent is at the heart of education and fintech. One of the things we can do in fintech is to build effort to educate people on how to integrate payment product and build a welcoming ecosystem. People who want to learn about fintech are not treated with suspicion all the time. As a company, Flutterwave is investing a lot in this by building developers community through support from organizations like Devcentres etc. We are trying to educate the people about fintech and how to plug-in as developers and make some money. This also helps our bottom line because the developers know how to use our product the better for your business. We are always happy to build ecosystem that build and offer education free.
With your experience in Andela, industry watchers expect you to raise fund easily for Flutterwave. Did you meet your expectations?
What it balls down to is to understand business development process. At Andela, one of the things I learnt was there are many ways to capture value especially when you are solving problems. We have carried that mindset to Flutterwave. With our business model, our partners do not pay for anything. Our infrastructure is free to anybody. The only thing is that when value is created on our platform, our partners should be generous enough to share a little bit of that with us so that we can continue to build the ecosystem.
Andela paid people how to learn and build software. Then, it looked foolish but ultimately, we built long-term value, which allowed that person to provide many opportunities to work and develop themselves as professionals in the space. You can decide to be on your own or you still want to stay with Andela. We want to replicate the Andela model in a way to capture value that is sustainable for everybody.
What kind of relationship do you envisage would exist between banks and fintechs in Africa?
The banks are very interested in not going into the fintech space. It is helpful to know that we have come to the 15 years of ice where innovation was outsourced and people do not think they have to innovate by themselves but market conditions have changed radically. We have come to the point that all it takes to be a banker was to get large government deposit. Where was 40% of the banking industry? In post-TSA, you have to work to make your bank break so that changes the game and they provide an incentive for the organization to move quickly towards embracing fintech and digital. I think the banks are struggling to figure out how to play, giving the multiplicity of porousity in the space. What we want the banks to do is to play with everybody, set yourself up. We are not picking winners. Set yourself up to play with everybody because you do not know where innovation will emerge.
Though you have to protect your traditional business, protect your core asset, you have to pick where you have focus and strategy. Ultimately, you have to build yourself a platform, which is where banking, as platform concept, comes from. What you are seeing now is process of alignment. What you will see in the next three to five years, the result will be different.
Banks do some couple of things well. One of those things is compliance. That is why they are able to maintain their license. The other thing they do well is the ability to manage their asset appropriately. They have the asset base to aggregate capital for deployment. It will be difficult for individual fintech company to amass the deposit and capital base banks have today.
Fintech is helping banks to reach customer base you do not necessary want to invest in. Fintechs are nimble and small and build on your infrastructure. They can help you to develop that market until such a time that you have to go into it. I thing that is how bank should see fintech. The next face will be banks acquiring fintech companies. Example of that is Access Bank and PayWithCapture’s partnership.
Can open banking promote financial inclusion?
That is the test of innovation in the market. However, is it wise for banks to invest in financial inclusion initiatives? From a social point of view, it is wise for banks to do so. What I also know is that there are individuals that are passionate about that problem. There are sustainable ways to solve those problems. Is that a billion dollar bank’s responsibility? Can the bank do it cheaply or effectively? Alternatively, a two-man staff with unique view of the market can come from that environment to deeply understand what the challenges and opportunities are. I do not think so.