Africa's tech ecosystem has received South Africa's attention. TymeBank and Nigeria Moniepoint Both in recent weeks have raised more than $1 billion in funding and joined the coveted unicorn pantheon.
But those values don't reflect investor confidence. They signal the success they've had in taking disruptive fintech models originally developed for mature economies and scaling them by tailoring them to a region where nearly half the population remains unbanked.
The main objective of both companies is to simplify banking for individuals and businesses in two of Africa's largest economies.
TymeBank began by providing low-cost bank accounts and savings products to retail customers before expanding into commercial banking, providing working capital to small businesses in South Africa.
Meanwhile, Moniepoint accounts, payments; Small businesses started in Nigeria with loans and spending tools and recently expanded into retail banking.
Importantly, Both fintechs are taking a hybrid approach to banking, bringing the convenience of digital banking to the real world. Mixed with physical touch points.
“In Africa, it’s a catch-22: you can’t have one without the other,” Lexi Novitske, general partner at investor Norrsken22 at TymeBank, told TechCrunch. “Many tech companies must build customer acquisition and engagement through highly analog or physical efforts.”
Informal markets call for a hybrid approach.
Their strategy contrasts with challenger banks in the US and other developed markets. Revolut, Monzo and Chime do what their names suggest: digital. Even some platforms in emerging markets Nubank versus JPMorgan's C6 or small businesses in Brazil turn on. Focused on digital only channels to build regional sector leaders in India.
But a digital-only approach is not ideal in Africa. There are exceptions, such as Valar-backed fintech Kuda – but there is a cap on the number of customers such a platform can reach. So they will hit a ceiling on (domestic) revenue, says Stephen Deng, co-founder of DFS Lab, an early-stage investor focused on Africa.
In addition, It is a region where cash is king, internet connectivity is unreliable and trust in purely online systems remains low. Cash is the dominant payment method across Africa, accounting for more than 90% of all transactions. McKinsey report. Bhaktha GSMA 43 percent of sub-Saharan Africa is said to have access to the Internet.
Tymebank and Moniepoint have created a strong middle ground in meeting the retail and business customers they have. TymeBank currently claims 15 million customers across South Africa and the Philippines, while Moniepoint says more than 10 million people and businesses use its services. (Kuda, It is worth 500 million dollars.(Not far from about 7 million users.)
“When venture capital is plentiful, you can get people to adopt your digital-only product, but the average revenue per user (ARPU) isn't enough to justify the cost in the long term,” Deng said. “Moniepoint, Tyme, and others realized the need to build physical touchpoints that engage the mass market while maintaining the ability to push your technology through those interfaces. This is what we say.”cybernetic'The approach is informal — often in person — as technology enhances channels without falling into the costly trap of trying to fully use those channels digitally.
Maturity and fit models of banking markets
One of the key things that TymeBank has done at scale is its retail partnerships with supermarkets such as Pick n Pay and Boxer to expand its reach in South Africa. These retail touch points function as sub-divisions: TymeBank to assist new customers in opening accounts and depositing funds; Adding a human element to its operations for those who prefer face-to-face interaction.
It is a model that recognizes and adapts how the average African consumer interacts with financial services. Walking into a supermarket to buy groceries and walking out with a new bank account feels natural to many people.
TymeBank has more than 1,000 kiosks and 15,000 retail outlets across South Africa. Meanwhile, its sister company GoTyme, a joint venture between parent company Tyme Group and local conglomerate Gokongwei Group launched in 2022, has adopted the same strategy and has nearly 500 kiosks and 1,500 bank ambassadors in the Philippines.
In Nigeria, QED-backed Moniepoint has taken a slightly different approach, building an extensive agent network across the country. About 200,000 of these agents are small business owners equipped with point-of-sale (POS) devices that act as human ATMs, depositing cash; They make withdrawals and bill payments. Safaricom's M-Pesa mirrors the model that has driven the success of mobile money in Africa, pioneered in Kenya.
Decentralizing its operations through agents is a traditional banking infrastructure; Bridging the gap between urban and rural populations by providing financial services in areas where there are no or unreliable banks or ATMs (16.15 ATMs per 100,000 adults in Nigeria as of 2022.)
Similarly, Countries like Nigeria are 'prosperity in the so-calledInformal'Trade–exemption from taxation and other authorities–includes almost It accounts for 60% of GDP.. This is done by connecting unbanked consumers and businesses. A model with physical components requires more than innovation.
Both companies now offer retail and commercial banking, as well as other services such as credit; working capital loans; business management tools; An integrated model is used, as are accounting and bookkeeping and insurance.
After their recent unicorn rounds; Both will look to replicate their designs beyond their home markets, where they claim to be profitable. For Tyme Group recently A $250 million Series D round led by Nubank was announced at a $1.5 billion valuation.It is already expanding to Vietnam and Indonesia. Like Africa, Emerging economies in Asia are experiencing a mix of digital adoption and offline dependence. If anything, GoTyme's current growth trajectory makes the move the logical next step.
After Collecting $110 million.Moniepoint will look to deepen its operations in Nigeria and expand to other African markets such as Kenya. It can explore these markets through acquisitions that will pave the way for greater regional consolidation.
Fintech's Outlook Beyond
In all this, TymeBank and Moniepoint are not the first fintechs to take the model to the unicorn level, so perhaps the most attractive part of the hybrid model is the reinforcement for African fintech.
And this is playing on their scale. First-time billionaire African fintechs, including Interswitch and Flutterwave, provide infrastructure and payment solutions for local and global merchants across the continent. Additional fintech unicorns including Softbank-backed OKStriped backing WaveChimera Investments-backed MNT-HalanAll using a combination of digital apps and real-world touch points, providing financial services to millions of consumers across Africa.
Fintech is arguably the most successful type of startup currently in the region, with eight out of nine startups valued at over $1 billion. As it continues to capture the interest of local and global investors, Such a model can act as a best bet for risk-type returns and at the same time encourage financial inclusion.
However, at the same time, There is significant potential to apply the hybrid model to industries beyond fintech, particularly in Africa's informal markets. For example, Telemedicine—an industry heavily dependent on trust—onboards patients locally, while streamlining operations through digital platforms. In-person touch points can be leveraged, says Novitske. He points out that e-commerce and group insurance models are other industries.
“I think most successful startups in Africa will master a hybrid approach,” comments Deng. “The connection between the digital and the physical is often where innovation happens, as organizing informal markets requires physical touch points. In B2B markets; Purchasing is often informal. In cross-border payments, including stablecoins; Domestic payments are not regular. Payment and delivery are not typical of local retail.”