The financial services industry in emerging markets is undergoing a rapid transformation, thanks to the advancements in financial technology. Companies are leveraging technology to create innovative payment solutions, digital lending platforms, and mobile banking services, thereby expanding access to financial services for millions of people who were previously excluded from traditional systems.
One notable company that caught my attention is Fingo, which gained recognition by being selected for the prestigious start-up accelerator YCombinator’s Summer Batch of 2021. According to their Crunchbase profile, they have secured $4.1 million in funding through two investment rounds. Recently, they launched their operations in Nairobi, signaling their ambitions to extend their services across Africa.
Fingo has identified Africa’s Generation Z and Alpha population as their target market. While this presents a substantial market opportunity, a more accurate assessment can be made by considering the Serviceable Obtainable Market, which factors in the living standards of the target audience.
In the past, Safaricom’s youth-focused tariff successfully attracted millions of subscribers under the age of 25 in a single market. This demonstrates that the younger generation seeks financial services that cater to their specific needs.
I have previously expressed the belief that money naturally seeks to flow freely, and transaction fees are on a path towards becoming negligible. Fingo differentiates itself by offering free account-to-account transfers, which is especially appealing for person-to-person transactions. However, the challenge lies in ensuring that this model remains profitable for the company.
In this regard, Ecobank could play a significant role by putting the idle funds to work through various financial instruments. Fingo’s savings concept, which allows users to create their own plans, is a welcome addition. However, given that the target market consists of young individuals who are often in a hurry, it will be interesting to observe how Fingo encourages this segment to prioritize savings, as the value of time and compound interest is not adequately emphasized in their education.
Finding ways to facilitate automated savings could be a key driver of Fingo’s growth, along with exploring strategies for quick liquidity. Additionally, their payment link feature is well-suited for the gig economy and multiple work engagements prevalent in their target market. The recently implemented KE QR code standard will further enhance the prominence of Fingo’s QR code feature, enabling interoperability across different payment service providers and ensuring a seamless user experience. Fortunately, Generation Z possesses the right mindset for embracing such advancements.
Fingo has employed a smart acquisition strategy by creating a waitlist and allowing select individuals to test and provide feedback on their platform. This approach has enabled them to iterate and resolve any issues before the official launch. At the time of their launch, they had already garnered over 60,000 pre-registrations, which is an impressive feat.
Overall, Fingo offers a solid product with excellent customer service and high availability. With their pan-African aspirations, they appear to have established two defensive moats that could contribute to their success in the region.