Daily we hear of FinTechs receiving venture capitalists backing to fund their startups. And the usual response to such investment windfalls is to use them for expanding their footprints beyond their primary location.
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Nigerian FinTechs are reputed for their ambitious endeavours. They often plan to use this funding to pursue ambitious projects by going International. You can always hear them planning to expand to countries in West Africa, East and Southern Africa. Nevertheless, these FinTechs must consider several issues before expanding their digital footprints. In this article, I answer the question “what must FinTechs consider before expanding their operations outside Nigeria or going International?”
The digital landscape of a destination is the first question FinTechs must answer before launching out to expand their operations. To start with, the digital landscape of a country entails the total collection of hardware, software, and content that interact with digital advertising. This includes email services, websites, computers, smartphones, videos, blog posts, and so on. To further illustrate, according to Policy Circle, the digital landscape condones the spaces and networks created by technological developments and digital infrastructure, as well as the role of stakeholders in these areas. Also, digital infrastructure refers to the infrastructure that is needed to maintain and operate a national and international computer network, process e-commerce transactions, and create, distribute, and access digital media content online. Therefore, the digital landscape of a destination is a very important consideration as it gives vital information on the strength of digital presence in that particular destination. We can call it the “Digital Ecosystem”. Hence, FinTechs must acknowledge this before they launch or expand their footprint. Without accurate study, they might encounter difficulty in setting up their infrastructure and executing their services.
Like any other business venture, the population of a destination is pivotal to the success and failure of your FinTech expansion. The population in the most simple sense means market size. For instance, Nigeria leads as a formidable force in the African FinTech industry because of its population. High population density spurs FinTech’s success.
- Sense Of Digital Landscape
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Beyond your chosen destination, having a digital ecosystem and population, you must also consider the question of how many people within a country have access to the internet. A country, especially in Africa, might seem poor at face value, but they might have access to the internet. Another country might seem stable economically, but they were late-comers in the mobile device and internet revolution. Others might be the system government and its stance on internet access. There are some countries where the government is very hard on internet access. Therefore, before launching your digital footprints in any country you must know the level of digital democratization in that country.
Number Of People With Mobile Internet Access
It is one thing to have the population, digital ecosystem and internet access, it is another to appreciate online or digital modes of financial transactions. There are countries where online transactions are part of their day-to-day life; they get everything, from food to appliances to sophisticated power-generating devices through online transactions. They are enthusiastic about it. On the other hand, some populations are sceptical about online transactions. There could be several reasons such as the natural tendency to embrace change, online fraud and the trust issues, proximity to traditional banks,
Behaviours Of People When Transacting Online
are they enthusiastic or sceptical about online transaction? Etc.
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Another thing to consider before FinTechs launch into a new destination is the predominant payment options in the country. There are different types of payment options, they include; Cash, Checks, Debit cards, Credit cards, Mobile payments, and Electronic bank transfers. This will determine what payment structures they may intend to launch in their new destination. In a country where cash is the predominant payment option, it may signal profit as well as a challenge, which is all about supplanting the status quo.
- Payment Options/Payment Types
This is when FinTechs take into consideration the existing digital payment services. This also will give FinTechs insight into existing opportunities and challenges, the existing competitors and so on. The population’s access to digital payment services could be easy, difficult or both. Also, a destination might have a scanty, semi-scanty, or saturated market.
This is the most important of all the considerations. FinTechs must study, research and understand the financial laws and regulations of the country as stipulated by the Government, the Ministry of Finance and the Central Bank. There are national governments that have instituted unfriendly policies on financial technology, while others are friendlier.
Featured Image Source: Payment Journal
Access To Digital Payment Services
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This article was first published on 13th April 2022