Launching a fintech venture? Here's some unsolicited advice

Ope Adeoye 5 minute read

E-commerce is so 2015. This year, fintech is the new e-commerce. Something new (or two, or three) is launching every month. Overall, this is a good thing. I suspect the motivations for those launching products or companies will fall into two categories. The first category want to create a sustainable business; the second category will ride the hype train to build up their profile and jump off at the next stop, just after the bumpy tracks.

Sometime in 2006, I got into some debate with Interswitch egbons about how "the internet is coming" and they were not preparing well enough to be the dominant payment backbone. They finally said, "see my guy, if you feel so strongly about it, come and join us to fix it". 

In the time I have spent on the inside, I have kept some notes you may find useful as you get your own venture off the ground. Especially, if you are in the first category I mentioned above.

The money is in the boring stuff

If you'd like to make money, you'd find that once you launch, opportunities would come to you from areas you didn't consider or may not like. Usually, these may be your moneymakers that people will not notice, and will be very grueling work. BigCos that ask you to build custom stuff for them. Long sales cycles to close those BigCos. Boring, B2B work that pays every month, but is not sexy. Look closely, you'd find money here. Till today, ATM and bank branch transactions still top the charts. Boring, ugly money.

The regulation risk is real

I understand the coolness of the take-it-to-the-man positioning. Please don't drink that kool-aid for too long. One rule, and your channels are blocked. If you were doing something that involves being able to debit bank accounts, all of a sudden banks seek out your transactions and block them. Why? The regulator is bearing down on them. So, learn to schmooze, get the paperwork required, make the friends required, follow (some) of the rules laid out. Then, hedge your bets. Dabble into some yet-to-be-understood-by-the-regulator schemes, so you can get some mileage before the hammer comes down.

Play the press game to build your brand

In the right circles. 

Use your B2C and retail play to build your brand, stay in the relevant news channels. If you follow through on advice #1 and your B2B customers or bank partners start to insist on pure white label, ask them to allow you to insert your brand somewhere in the mix. Attend as many of the conferences as doesn't distract you, but only as a brand building and networking exercise.

Fraud? Oh, fraud!

A company, about 3 years ago insisted we were just being difficult by not letting them process international cards on their website. We caved in to pressure and opened it up for them. Within one month, they were owing their bank multiple millions in fraud-related chargebacks from stolen cards used from abroad. Lesson learned. Don't be an ostrich or a stupid cowboy, this fraud thing is real. Follow some of the rules you hate, and put tools in place.

Stay lean, stay mean.

This one probably applies not just to payments and fintech. If you take investor money, they'd come at you with grow grow grow. Don't totally conform to that. They may not bring that follow-on round, especially if you don't grow as projected. Or Naira starts dancing makossa with Dollar. Watch your money like a hawk. Negotiate hard with customers and partners, avoid getting into price wars (it's a race to the bottom) and focus on value adds that the incumbents will take forever to implement. Your nimbleness is your strength. Use it.

There's still so much opportunity out there. Some reports say that ALL players competing in the electronic payments space in Nigeria are all fighting in 10% market penetration waters. Personally, I wonder why we compete when we can gang up and claim the 90%. Believe me, the global players in the various aspects still struggle to understand our market, so let's claim the land before they do.

Here's a little teaser for you: How many people have salaried jobs vs how many people receive their salaries via automated payroll?

Here's another one: How many danfo drivers take the day's "deliver" money to the bus owner as cash every night, who in turn wishes he could invest some of it towards school fees? 

And another one: how many people find reason to borrow money every month towards payday?

And a final one: How much do churches collect in offering plates and baskets every sunday across Nigeria?

I hope I have somehow managed to keep this short and concise enough and not come off as... [can't find the best word].

Break a leg!