Mukuru’s recent inclusion in the iAMTN 2020 Annual Report: A Trend Driven by the Covid-19 Crisis – the Shift to Digitalisation in Cross-Border Remittances, highlights the importance of strong payment system interoperability that enables the scalability of digital remittance channels. Where this does exist, the global pandemic has been a catalyst for digital growth in the cross-border remittance space. A case in point is the brand new Mukuru-Thunes partnership that expands our reach and connects our users to Thunes’ global interoperable network which operates in more than 100 countries. Thunes’ advanced technology streamlines the process of cross-border money transfer through a single API connection, resulting in greater speed and operational efficiencies.
Symbiotic partnerships shaping world banking
In many developing markets, savvy fintechs are leveraging symbiotic partnerships to bring financial services to users in a more affordable, accessible way than has previously been possible; accelerating financial inclusion for large swathes of previously unbanked users. These increasingly powerful alliances are shaping and developing world banking by taking users on a step-by-step journey to financial empowerment – with users becoming familiar with self-service onboarding and KYC procedures, for example, which can be increasingly achieved via mobile phone.
In Mukuru’s case, our more than 80 partnerships extend our footprint to over 70 countries; leveraging existing services and infrastructure to significantly increase both pay-in and pay-out options along with a broader range of financial products, such as money card, funeral cover, and the ability to order essential groceries and stationery for loved ones back home.
Regional alliances as a source of innovation and growth
Despite the economic and political hardships in the region, which have been deepened by the global pandemic, Mukuru remittance flows across African borders have remained remarkably resilient in the past 12 months. Three factors are largely responsible for the increase in monthly transactions and year-on-year financial growth: A growing trust in both physical and digital money transfers. The lifeline that remittances provide to families and communities. And dynamic regional partnerships, and strong relationships with regulators, major banks and other remittance and money transfer providers.
Mukuru CEO Andy Jury, says, “Our partnerships continue to be a source of both innovation and growth across our network, with our homegrown technology solutions continually evolving to meet the day-to-day needs of our customers.” Jury adds, “We meet customers wherever they are, which today includes a variety of both physical and digital touchpoints across Africa, Europe and Asia.”
In fact, the Mukuru business in South Africa was initially launched in 2010 as a joint venture with Inter-Africa, a Bureau de Change. Two years later, the fintech created a free customer USSD platform, splitting a transaction into its various parts. Customers after creating an order, had a reference number texted to them, which they presented at a retail partner where they paid for the order in cash. PEP was Mukuru’s first retail partner in South Africa.
Other partnerships have followed with the likes of retail giant Shoprite/Checkers as payin/payout points, and in the last 12 months, Mukuru became a payout partner for WorldRemit customers across territories where Mukuru has its own booth and branch network. Mukuru has also partnered with the likes of Ozow which enables customers to make easy payments using the Mukuru App; and Flash aimed at senders in South Africa who can now send money to their loved ones by paying for their orders at any of Flash’s 175,000 vendors across South Africa.
A new partnership with global payment network Thunes will initially extend Mukuru’s reach in Nigeria followed by a rapid rollout to other corridors such as DRC, Ethiopia, Senegal and India. Thunes’ global network connects mobile wallet providers, banks, fintech companies, payment platforms and money transfer operators, allowing them to process cross-border payments in a cheaper, faster, more transparent and secure way.
Obey Itai Domingo, Thunes Business Development Director SADC, says, “Thunes is leading the way building a global cross-border payments network with real-time transaction processing. Our coverage across Africa, Europe, the Americas and APAC (Asia-Pacific) gives our customers the most accessible, fast, and reliable interoperable local payment solutions around the world.”
The upheavals and opportunities of the last 12 months have highlighted the importance of strong payment system interoperability that enables the scalability of digital remittance channels. The main point of congruence between Mukuru and Thunes is the use of technology that supports interoperability using highly automated, scalable platforms with modular APIs.
Transformation through partnership ecosystems
Jury says, “There can be no doubt that almost every sphere of banking and financial services is being transformed by new, digital ecosystems. Characterised by agility, innovation and partnerships, many of these emerging ecosystems are being shaped by dynamic and nimble fintech players in alliance with more established, traditional banking partners.”
These ecosystems can be loosely understood as falling into two, complementary digital models: Banking as a Platform (BaaP), and Banking as a service (BaaS). BaaP is essentially a digital marketplace, owned and operated by a bank or another (potentially nonbank) entity that provides banking and non-banking services. A BaaP provider has typically aggregated a deep customer pool. On the other hand, BaaS is an end-to-end process that allows fintechs and other third parties to connect with banks’ systems directly via APIs – so that they can provide turnkey products or services on top of the providers’ regulated infrastructure (wherein the bank is effectively playing the role of the platform provider).
Jury adds that this is just the beginning for alliances that leverage both platform banking (BaaP) and banking as a service (BaaS). “Not least because they allow service providers with deep specialisations such as insurance, home loans, or remittances – to gain access to new customers without any major investment or infrastructure spend. Moreover, institutions with strong aggregated customer pools can connect these customers to a broader array of services that increase customer retention / share of wallet, etc.”
In the wake of the global pandemic, finding these types of cost-effective but powerful ways to expand reach and deliver business value will become increasingly important – and arguably, a way to achieve longevity in a fast-changing banking environment.
Crucial elements of a working partnership
While a foundational business case is established for each partnership, there is often an intuitive aspect to selecting an alliance. For example, a partner may have just five branches to bring to a partnership – singularly unimpressive on paper, but the handful of branches may service a larger percentage of customers in a smaller, significantly under-served country. This would be weighed against Mukuru’s objectives for a particular region.
When assessing the veracity of a partnership, Jury says they must be characterised by transparency as well as the ability to be agile and fast moving. For instance, both parties must be willing and able to share the relevant IP upfront, as well as API documentation and all the relevant data to link systems and processes together.
Jury says, “Intentions and processes should be documented and clarified early on, and critically, there should be the ability to test the turnkey nature of the proposition – with quick, accurate and comprehensive results that can affirm the value of the alliance (or reveal gaping weaknesses in the proposition). With digitisation and access to real-time data, long gone are the days when decision-makers have to rely on expensive market research or the word of potential partners. Instead, we live in a world of instantaneous feedback loops, so alliances/ partnerships should be taking their cue from real-time data and rigorous user testing that informs strategies from the start. A common desire across partners to get out the starting blocks quickly, and then to test, learn and refine is often a critical indicator of the partnership’s success potential.”
Mukuru remains deeply appreciative of our partners who work with us to bring financial services to users in a more affordable, accessible way that accelerates financial inclusion for many more previously unbanked consumers.If you have questions, or would like to discuss any issues or opportunities, please feel free to get in touch at [email protected].