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Emerging marketplaces: Understanding South Africa’s fintech landscape

Standard Bank Group CEO Sim Tshabalala has one goal: “We don’t want to be the shop; we want to be the mall.” One of the big four banks in South Africa, they are heading swiftly towards a marketplace model of banking. Recent developments include  

  • Contactless payments with UnionPay across the country  
  • Partnership with WebAfrica to offer high-speed internet fibre 
  • Selected Flutterwave to help with digital transformation 

They’re making all the right moves. Despite this, their rankings on the 2021 South African Banking Sentiment Index declined by 1.4%. Competitors like Absa scored highest on the index. First National Bank trailed with lowest net sentiment. And Nedbank showed a 9.9% improvement overall.  

But all four of them consistently scored less in one category: customer service on social media.  

Customers across all segments, and all countries, have grown used to the digital medium. (Thanks to the influence of big tech players such as Amazon, Facebook aka Meta, and Google.)  Now, they expect every digital experience to maintain or exceed the standards they’ve become accustomed to. 

And South African customers have grown increasingly fond of this online space. In 2018, e-commerce accounted for just 1.4% of total retail sales. Post pandemic, that percentage doubled, with an estimated revenue of 4 Bn USD in 2020. It is now expected to grow to 4% by the end of 2021. This made South Africa the 37th largest market for e-commerce.  

Rising South African fintech 

With the growth of e-commerce, the use of digital payment options too has increased. While close to 80% of the population have bank accounts, only 24% make more than 3 monthly transactions. E-wallets and other digital payment gateways are a more accessible and convenient alternative to credit cards – since most users do not need/use the value-added services that come at an extra cost.  

And so, these fintechs have been able to find investors. Take for instance the payment gateway Ozow. In November 2021, they raised 48 Mn USD in a Series B funding backed by Tencent. The plan is to provide more alternative payment solutions to their millions of merchants and consumers. AI-led fintech platform JUMO was backed by Visa, Fidelity and London-based investment management firm Kingsway Capital to the tune of 120 Mn USD.  

Even the real ‘Wolf of Wall Street’, Jordan Belfort, is cashing in! He is in Cape Town in December 2021 to “bring fintech secrets” to South Africa in a conference organized by Phenom Ecosystem. 

 The sprint to marketplaces 

Even as these fintech options abound, for customer, the requirements remain simple. They want/need to shop. The more convenient for them, the better. Banks in South Africa must provide this ease of access to their customers.  

And marketplaces are the perfect way to do that. They offer a competitive advantage for banks over new fintech entrants. Because banks can cash in on their existing customer trust score.  

There is a catch, though. It has to be done just right, in a way that’s profitable for everyone involved: banks, merchants and customers. Run-of-the-mill marketplaces have these two major issues.  

  1. Unreasonably high fees:  High fees and surcharges deplete as much as 40-50% of merchant profits. This leads them to end such partnerships. They would rather focus on upping the customer experience game on their native channels. And tend to keep it that way at the cost of scale. 
  2. Lack of actionable insights: Most marketplaces get ‘personal’ by merely describe something unique or private (like emails addressing them by name). What they miss out on is ‘personalization’. That is, understanding individual preferences and using those insights to create meaningful experiences. 

The solution? maya.ai’s personal personalized outcomes 

Crayon Data’s flagship platform, maya.ai, features a personalized marketplace. It remedies the pitfalls of traditional ecommerce and other marketplaces. By ensuring that enterprises, merchants and customers can make the most of the platform. Read more about it here.  

Want to bring a personalized marketplace revolution to South African banking? Talk to our experts today! 

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