Correctly utilising data is crucial for a financial institution to properly serve its customers, and in the way the customer wants. While there is plenty of data around, there is also “invisible” data to be mined. Standard Bank has made an investment to try and benefit from this. Patrick Brusnahan writes
A firm looking at different ways to utilise data is Nomanini. Founded in 2011 and headquartered in Cape Town, it connects merchants and distributors to each other.
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In addition, it can turn any mobile device into a retail point-of-sale solution. This allows the fintech to generate real-time insights based on transaction data.
Nomanini completed a $4m funding round led by Africa’s largest bank, Standard Bank. The lender gains a stake in the fintech and the ability to use its platform to unearth previously “invisible” data.
Furthermore, the mobile application can provide access to new lines of business, credit and savings services for millions across Africa. It is currently available in South Africa, Zambia, Mozambique, Uganda, Malawi, Zimbabwe, Namibia, Ghana, Nigeria, Kenya, Tanzania eSwatini, Lesotho, and Botswana.
With this new analysis, creditworthiness can be more accurately assessed and many will become eligible for loans for the first time.
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By GlobalDataThe partnership is a culmination of Standard Bank and Nomanini’s shared mission: to help the informal retail trade grow. Furthermore, it is part of Standard Bank’s commitment to branchless banking, helping its customers “bank at any time, from anywhere”.
The app will allow Standard Bank to boost financial inclusion, and, at the same time, expand its customer base while addressing the business needs of Africa’s informal retail merchants.
Speaking to RBI, Adrian Vermooten, head of digital in Africa Regions, Standard Bank, believes “there is a lot more data than is currently being consumed”.
On what data Standard Bank is hoping to see, he says: “In order to build a profile of the shop turnover and related cashflows we need consume data from sales in the shop. Where the shop is already using a counter top device to sell prepaid airtime and other value added services…such as prepaid electricity….we are able to use this data to proxy shop turnover, and build out a risk model for the shop.”
CROSSHEAD: Data
Are merchants and consumers ready for the level of data usage?
Speaking to RBI, Vahid Monadjem, founder and CEO of Nomanini, explains: “Traders and distributors are rightly concerned about use and misuse of the data they generate. We are extremely careful with how we handle this precious data. Fortunately, in financial services, the regulation around the protection of user data is well established, and we abide by best practice internationally. This is also why Nomanini is a founding signatory to the ‘Responsible Investing in Digital Financial Services’ Guidelines.”
Vermooten adds: “In this case, the merchant or trader is extremely excited about the outcomes related to sharing data. For many traders, this data is helping the trader get access to lending and broader financial services for the first time.”
The time is right for these developments in Africa. Much has been written and said about the success of digital solutions such as M-Pesa in the continent.
According to McKinsey, consumer spending is expected to reach $2.1trn by 2025 in Sub-Saharan Africa. However, almost nine-in-ten transactions still happen in cash, according to Deloitte, in informal channels such as kiosks and independent shops.
Monadjem states: “Nomanini doesn’t focus too hard on consumers outside of how they interact with retailers. Providing consumers a channel for payments is more of a by-product of providing (digital) solutions for informal merchants and traders to grow their retail business.
“For retail traders, the data that really describes their business is often not digitised. It is based on cash and paper records. There is an enormous opportunity to combine new digital financial services with existing distribution channels to digitise informal retail en masse. However, it starts with solving the real pain points of retailers, not just be digital for digital’s sake. That’s why we focus so obsessively on how we improve their retail businesses.”
Vermooten concludes: “As Africa becomes more digital, the viability of connected devices in the 4th Industrial Revolution grows exponentially and provides the opportunities for new business models.”
