Africa’s tech ecosystem recently received a boost with the successful fundraising efforts of South Africa’s TymeBank and Nigeria’s Moniepoint, both surpassing the $1 billion valuation mark and becoming unicorns in the region.
These valuations not only reflect investor confidence but also underscore the success these companies have had in adapting disruptive fintech models originally designed for mature economies to work in a region where almost half of the population is unbanked.
Both TymeBank and Moniepoint aim to simplify banking for individuals and businesses in two of Africa’s largest economies. TymeBank started by offering low-cost bank accounts and savings products to retail customers before expanding into business banking to provide working capital to small businesses in South Africa.
Similarly, Moniepoint initially supported small businesses in Nigeria with accounts, payments, loans, and expense tools and has now ventured into retail banking as well.
Crucially, both fintech companies are taking a hybrid approach to banking, combining digital banking convenience with physical touchpoints to cater to the African market’s needs.
According to Lexi Novitske, general partner at Norrsken22, “In Africa, it’s a catch-22: you can’t have one thing without the other. Many tech companies must build customer acquisition and engagement through highly analog or physical efforts.”
Highly informal markets call for a mixed approach
In contrast to challenger banks in developed markets, companies like Revolut, Monzo, and Chime operate primarily digitally. However, in emerging markets like Africa, a purely digital approach may not be ideal due to factors such as the predominance of cash transactions, unreliable internet connectivity, and low trust in online systems.
Thus, platforms like TymeBank and Moniepoint have embraced a hybrid model that focuses on meeting retail and business customers through digital channels augmented by physical touchpoints to bridge the gap between the digital and physical worlds.
Both companies have now expanded their services beyond banking to include credit, working capital loans, business management tools, accounting, bookkeeping, and insurance.
Models tailored to the maturity of banking markets
TymeBank has successfully scaled by forming retail partnerships with supermarkets like Pick n Pay and Boxer in South Africa, extending its reach and providing a human touchpoint for customers. This approach aligns with how the average African consumer interacts with financial services.
On the other hand, Moniepoint in Nigeria has built an extensive network of agents nationwide, including small business owners acting as human ATMs, enabling cash deposits, withdrawals, and bill payments. This decentralized approach caters to populations where traditional banking infrastructure is lacking.
Both TymeBank and Moniepoint have expanded their operations and are looking to replicate their success in other markets outside their home countries.
Outlook outside of fintech
The success of the hybrid model in fintech is evident in the rapid growth of companies like TymeBank and Moniepoint. This model, which combines digital innovation with physical touchpoints, has proven effective in driving financial inclusion and attracting investor interest in Africa.
Beyond fintech, there is potential to apply the hybrid approach to other industries in Africa’s informal markets, such as telemedicine, e-commerce, and group insurance, to leverage local touchpoints and digital platforms for growth and innovation.
As Deng commented, “We think most successful startups in Africa will master a hybrid approach. The interface between digital and physical is often where innovation happens…”
