Rise of new Fintech business models – Emerging economies go lifestyle

Last week, I was interviewing a VC based out of Pakistan. I took away several insights from the conversation, however, there was one major highlight that would stay with me for a long time. There was a point where the distinction between Fintech businesses and business models was made.

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That distinction was further enriched when we discussed how many emerging economies created Fintech business models embedded within lifestyle businesses. At that point the realisation hit me – the realisation that emerging markets has seen more lifestyle businesses provide Fintech as a byproduct business service. However, in the UK, Europe and the US, we see several businesses explicitly tagged as Fintechs providing core Fintech services.

Therefore, I thought it would be good to write about lifestyle/non-Fintech businesses across the world, that are offering or looking to offer Fintech services. Let me start with Pakistan.

Pakistan rides on Bykea: Bykea started as a ride hailing app, moved to food delivery, and in due course has now started offering financial services to many of its clients.
As they are able to track a customer’s financial transactions they are able to assess if they can offer micro credit to them. Bykea upgrade partner drivers from a cash economy to creating their first ever bank accounts. First time customers can use cash for a booking, however, their model encourages cash top ups to an in-app wallet.

Indonesia Go-Jek and South East Asia’s Grab: Indonesia’s road traffic challenges seem to be alleviated, thanks to motorbike Uber models Go-Jek and Grab. Go-Jek has been around since 2011, and it is now as much a payment app as it is a ride hailing app. They have 1 million drivers, 125,000 merchants, and 30,000 other services, spread across 50 cities in Indonesia. Tencent and KKR are investors in Go-Jek.

Grab has presence widely across South East Asia, operating using the same model. Softbank Group and Microsoft are investors in Grab.

Africa – Energy, Farming and Fintech: In Africa, the lifestyle use cases in focus are in energy and agriculture. As solutions for both these value chains emerge, they often come with a financial inclusion business model integrated. Although, I can’t name them – recently I came across a firm, who provided Solar based last mile charging and other energy services to African villages. The payment for these services could be through M-Pesa or a mobile Wallet.

The other model followed by firms such as Banqu, Binkabi and Agriledger is to use Blockchain technology to track farmers’ transactions. As more and more transactions are registered, the farmer creates a economic identity, which can be used to check their credit worthiness by suppliers and financial service providers. These solutions can also provide wallets for these farmers to enable friction free international transactions.

China’s Leapfrogs: I have got addicted to talking/writing about Alipay and Wechat. While Alipay took over Fintech from an ecommerce base, WeChat began their conquest from a chat messenger business. The impact they have had within China, complemented by China’s drive towards AI and Blockchain has helped the nation’s credibility. The world can no longer perceive China as just a manufacturer of cheap goods. Thanks to their success, the data created from their ecosystem, can be used to create innovative business models.

India Telecoms and Fintech: Fintech in India cannot start or end without the talk of PayTM – the firm that won investments from Softbank, Alibaba group and Warren Buffett’s Berkshire Hathaway. However, several Telecoms providers in India have taken inspiration and started providing Fintech services. Airtel, one of the top telecoms provider in India offers a wallet and even a bank account.

Google launched their Tez app a couple of years ago, and has recently rebranded it to Google pay. They have seen good success. The other name that we can’t miss is Whatsapp – who have been trialling payments in India. At the moment, they are unable to go live with the feature due to regulatory pressures to store the data locally in India. However, the gist is that different players are providing financial services as an add-on business model.

Nordics and their Wrong-un: A wrong-un in cricketing terms, also known as a googly, is when a leg spinner (bowler) suddenly makes the ball spin the wrong way. The Nordics have led the world in creating cashless societies. However, more recently its the banks that are leading financial inclusion business models through federated economic Id creation.

Norway integrated the government Id to taxes and student loans, and that helped the e-Id concept take off. Today, Bank Id in Norway has 74% penetration, in Sweden it has 78% penetration, in Denmark NemID has 85% penetration and in Finland TUPAS has 87% penetration.

Once these bank Ids became mainstream, thanks to collaborative consortium based approach from banks, new non financial services business models were created on top of that. There were life style use cases that could be possible, thanks to the economic Id boom.

It’s interesting to see how in more developed ecosystems, banks are driving lifestyle business models, and it is actually vice versa in emerging markets. Thanks to technology, one thing that’s common between the two is the customer focus. As long as that remains, even the wrong-uns can yield the right results.


Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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