Thirty-one years ago, Clydestone Ghana was incorporated on June 15, 1989. Since then the fintech company has pioneered many solutions into the Ghanaian and regional market. In this interview, the founder and Group CEO of the first Ghanaian tech firm quoted on Ghanaian stock exchange spoke with Fintech Africa. Extracts.
Over the years Clydestone has pioneered many solutions into the Ghanaian and regional market. How has the journey been in terms of milestones, challenges and future opportunities?
The journey has been exciting and challenging. We now operate in a dynamic and competitive industry where one must be constantly adapting to market forces and trends. When we started in 1989, the operating landscape was not as fast-paced as now. I remember that we were using mostly fax machines to communicate with our suppliers and customers. The internet was just starting, and it didn’t become the mainstream until the ’90s. We had to print and fax our orders and mail correspondences to customers and suppliers. The landscape has changed dramatically with the advent of the Internet as the main form of communication.
Initially, the main business was personal computer sale (we represented Tulip Computers). We used to sell fax machines, telephone systems and accounting software. We worked with Computer Associates to supply their ACCPAC and Masterpiece accounting software. We were also involved in the installation of Novel Networks using co-axial cables with T-connectors. We also sold Lotus Notes to major corporate organisations in Ghana.
We have since evolved and adapted our business to the current industry trends. We have graduated into local and campus area networks using category five cables and modern switches from Cisco. We also lay fibre optic cables for several large corporates in Ghana. We have undertaken several campus networks and data centre network infrastructure. In 1996 we partnered with UNISYS Corporation and moved into the payment system space and that is where our focus has been since 1996. The tie up with Unisys made a significant contribution to the growth of the business and the direction.
We won a $2 million contract in 1996 to automate the clearing system in Ghana. That was the deal that changed the fortunes of the company and propelled us forward. We went on to provide solutions to several banks, who we continue to provide Automated Cheque Clearing Systems to. During a labour dispute at the Bank of Ghana some years back, we were awarded a contract to run the clearinghouse at our premises for quite some time and we discharged our services in this regard until the current Ghana Interbank Payments and Settlements Systems Company (GhIPSS) took over the role, a national service we were proud to perform.
We have ventured into the transaction switching business in 2006 after acquiring a Postilion Switch from Mosaic, which became S1 and now ACI. We have provided transaction switching services to some banks and savings and loans companies. In 2009, we partnered with China Union Pay [Union Pay International] to acquire their cards in some African countries. We are a principal acquirer and third-party processor for Union Pay International. Our current product portfolio consists of instant card issuance solutions, strong customer authentication (SCA) solution and authentication service, 3D-secure issuer and acquirer solutions and service, cash processing technology comprising ATMs, cash recyclers and deposit equipment and ATM driving and monitoring software.
As the grandfather of Fintech players in Ghana, can you outline some of the big trends in the fintech industry in Ghana and how it has evolved over the years?
Grandfather? I have been in the industry for a long time and the Fintech space has witnessed very rapid growth in the last few years. We have pioneered the automated bill collection through our subsidiary Remittance Processing Ghana Limited (RPGL) in 2001 when we partnered with Ghana Post to form the Rapid Payment Alliance (RPA) PayPoint that collected utility bills at the Post Office counters.
Then, we have couriered collections to our processing centres in Accra and Kumasi and have processed transactions overnight using high-speed image-based documents processing transports. We are efficient in our ability to deliver services to our customers. In fact, we lost the business because we are too efficient. This development is a story for another day. Today, we see a lot of mobile apps offering bill payment services with funds held in a wallet of the provider or via a linked funding source. The industry has evolved significantly in the last few years.
We have also deployed our transaction processing switch Global Switch (G-switch) in 2006 and were close to running an interbank network until the regulator stepped in to provide one. We had signed on six banks then. If we had received the necessary support, we should have evolved into a fully-fledged switching company like Interswitch in Nigeria. Now, we are the only Ghanaian-owned and deployed international switch processing for a global card issuer. I can say we have pioneered solutions in the marketplace but we have not scaled exponentially as envisaged. This is due to market forces and competition from better-resourced foreign entities operating externally.
With the advent of mobile money, the landscape has changed significantly. I wrote the first mobile money document for a telco in Ghana in 2007. This included defining the transaction types and flows and defining the initial market target and regulatory environment pertaining then. The deployment, however, was undertaken by a group-preferred vendor which was a lost opportunity for Clydestone. A whole business ecosystem has developed from mobile money and has been a catalyst for Fintech activity in Ghana and the continent.
Bank of Ghana recently announced a regulatory framework for fintech. Are you comfortable with the framework, particularly the fees for service categories?
I am comfortable with the framework, although I am of the view that the fees could have been slightly lower. The various categories are satisfactory and it should ensure that investment and compliance are rewarded. It makes room for innovation from start-ups with the standard licence category, and the regulator should be commended for this. I am also happy that foreign card schemes will also have to be licensed under the Payments Systems Act which will ensure that the playing field is well defined and regulated for good practice and risk mitigation.
What are the best decisions Clydestone have made that led to growth in the last 31 years and the most painful missed opportunities?
The best decision was our partnership with Unisys. It enabled us to work with a global multibillion-dollar company which helped to shape our growth. Through training and exposure to the best practices, we have been able to develop capabilities within the company that propelled us forward in a short time. Our missed opportunities are numerous. However, we do not dwell on them. The notable missed opportunities include the Ghana Customs Management Systems for which we competed with the vendor that won.
Another one is the first Ghana National Identification bid. We had a solid solution and consortium in place but we missed it. Also, our inability to scale G-switch despite all the efforts and investments we made into the venture. Despite these setbacks, we are innovating and developing new solutions and forging new partnerships to pioneer unique products and grow the business. We are now focused on developing our own platforms to offer services across the globe.
Apart from the Ghanaian operations, Clydestone has offices in Kenya and Nigeria. Share your experience of running fintech in several countries in Africa?
Ghana is our home base. Venturing into Nigeria was our first foray outside Ghana and it has been quite challenging. However, after several years, our efforts are now being rewarded. We see a very significant part of our revenues coming from Nigeria in the coming years. We ventured into Kenya mainly as an acquirer and to handle UPI business.
With the established footprint there we hope to offer new platforms for multifactor authentication and identity-based solutions. Expanding out of your home base is quite an enormous endeavour. One must be very resilient to be able to navigate the terrain. Competition from local established vendors demands an extra effort to get your foot in the door. Perseverance is important to success. We are still persevering
In one of your published write up, you wrote that your journey of encouraging service providers to deploy authentication solutions across Africa has been fraught with euphoria and dysphonia. Share your experience and what you have to offer the market now?
Yes, we have been marketing authentication solutions to financial institutions with difficulty. The products are needed. But the investments required to deploy the solutions are beyond the budget of most of the prospects. We, therefore, decided to solve our dilemma by deploying an Authentication as a Service (AaaS) platform. The platform will be launched in August 2020 and we expect this to enable the banks, fintech and mobile money providers to sign up in order to better protect their customers by offering strong customer authentication using the platform.
The service is called TheOne. Details are available at www.iam-theone.com. The platform is multi-tenant and can host each entity securely to enable them to offer multifactor authentication by the generation of one-time password tokens and sign transactions as a basic feature with biometric capability. Full application protection, secure channel and out of band capabilities can also be deployed using our software development kit.
Your payment transaction switch has achieved a handshake with leading processors in Nigeria and Ghana. What are the milestones recorded and future opportunities?
We have connected to Interswitch in Nigeria and Kenswitch in Kenya. I must say that l salute the collaboration offered by both companies. We have not fully realised the benefits of this interconnections, but l am confident that this will materialise in the medium term. As private switches, we have led the way for the national switches to follow.
On the Clydestone 31 anniversary, what message do you have for shareholders, board, management, staff and customers who have and continue to patronize your services for over three decades?
I am very grateful to everyone who has contributed in any way to the incorporation and continued existence of Clydestone. Although l founded the company, the journey has involved several people over the last 31years. This has enabled the company to deliver services and still be in business. So, as we celebrate this milestone, the shareholders, board, management and staff, we are grateful to all our customers who have and continue to patronize our services for over three decades. To all our current and former directors, team members, and business partners, we thank you for your contribution to our journey.
Our milestones include the deployment of solutions that have brought positive change to several public and private organisations over the years and we look forward to many more years of innovation, development and support. To all our patient shareholders who have endured the ups and downs of our fortunes, we thank you for your support over the years. The horizon is set for the rainbow