Exclusive: Palmpay CEO, Greg Reeve Says Banks Need to Collaborate with Fintechs to Survive

Traditional banking in Africa may not have lost its grip on consumers yet, but the evolution of Fintech on the continent is gradually leading folks out of the old system and showing them a better, easier and faster way to access their financial needs.

With the creation of tech-based products and solutions, Africa-focused Fintech startups, like Palmpay, are filling the large gap in the local financial service space. The Fintechs are driving financial inclusion on a continent where about 66 percent of its adult population is unbanked.

Palmpay, a mobile money platform operating in Nigeria and Ghana, is making financial services accessible to the unbanked sector. The platform, which was launched in 2019, is gradually building a financial ecosystem that is open to as many people as possible.

As the company’s CEO, Greg Reeve, put it, the idea is to give more Africans the opportunity to “deposit funds via an instant bank transfer or through an agent down the road, and then immediately have the ability to access dozens of products, hundreds of merchants, all in a matter of minutes”.

Speaking on the disruption of the financial space by Fintechs, Reeve believes that traditional banks and digital platforms in the industry need to collaborate to create better experiences for their customers.

In this interview with Business Elites Africa, Reeve elaborated on the importance of financial inclusion and the future of Fintech in Africa.

What does the term “financial inclusion” mean to you?

Financial inclusion for us means that people can access a range of financial services to enable them to achieve their goals and advance their lives. This means that the services themselves have to be designed and delivered in such a way that they are accessible, affordable and relevant to the needs of consumers.

At PalmPay, we want to provide a financial ecosystem that is open to as many people as possible, and that’s why we decided that the only requirement to access financial services from us should be that you have a smartphone. If the bank branch is in your pocket, then we can build a financial ecosystem that you can discover and connect with anywhere you go. Being able to sign up to PalmPay on your living room sofa, deposit funds via an instant bank transfer or through an agent down the road, and then immediately have the ability to access dozens of products, hundreds of merchants, all in a matter of minutes, is what it’s all about for us.

What are some of the most effective ways in which your company is currently promoting financial inclusion in Africa?

 Our goal is to provide millions of consumers with the best choice and value for digital and financial services in every market that we operate in.

In Nigeria, there is already a lot of activity and innovation in the financial sector, but one of the challenges the market is experiencing is the variable quality of the payments network itself. So the approach PalmPay is taking in this market is to build a really solid foundation and a very reliable financial platform, and then layer on top of that a variety of use cases and products that we think our users will love.

We like to partner with existing companies in the market that already offer services that customers value, and help them reach a wider audience – for example, we’re now selling cinema tickets on PalmPay in partnership with Nairabox.

We innovate and create our own services too. Being a technology company means that we have a lot of creative minds on our team that don’t shy away from thinking outside of the box, and we draw inspiration from around the world. For example, one of our most popular features is called “Lucky Money”, which was inspired by a finance product that first appeared in China.

The main investor in our company is Tecno Mobile, which has over 50% market share of all phones sold in Africa. This partnership is important to us because it allows us to think big when we approach the challenge of financial inclusion. This year alone the PalmPay app is being pre-installed on 20 million phones, so that’s 20 million people that we can introduce to products that may currently be mainly experienced by an audience of tech-savvy early adopters.

We’re also building out a Mobile Money agent network and online and offline merchant networks in Nigeria so that PalmPay can be used in a variety of ways by both individuals and businesses. Having our own agent network means that even people without a bank account or BVN can easily open a PalmPay wallet, deposit funds to it and start transacting. Through the PalmPay ecosystem, our aim is to integrate the use of digital financial services into people’s daily lives.

What do you think is the most single effective solution for boosting financial inclusion levels in Africa?

Education, education, education – I would like to see children educated in financial lending, savings, insurance. It will ensure that people are aware of what is available to them and how they can benefit their own lives by taking control of their finances. We believe that companies have a duty to do this too, to help consumers make the best choices for themselves.

 In the efforts to boost financial inclusion in Africa, does your company form strategic partnerships with FinTech companies, Startups, SMEs, etc.?

 PalmPay’s vision is tied to forging strategic partnerships across the sector and beyond. We believe that together, we can move faster and do more.

One of our important international partners is VISA. We’re working with them to scale access to VISA’s products in the market, and are trying some new approaches together. Later this month, we’ll be launching a virtual Visa card in Ghana that will offer some benefits that are quite unique in the market.

We’ve got some other strategic partnerships in the works too that I’m looking forward to announcing soon.

In what way (s) is the company adequately supporting Africa’s MSMEsector? Kindly mention a few projects with which the company has been involved in recent times?

 MSME’s are absolutely key to the growth of the African economy. In addition to partnering with local startups and service providers to build out the PalmPay ecosystem, we’ve also created products and features that are specifically tailored to the needs of business owners.

PalmPay is a Mobile Money Operator licensed by the Central Bank of Nigeria, and in addition to the consumer PalmPay app, we also have an app called PalmPartner that is used by our agents.

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We also provide a platform for merchants. One of the most useful PalmPay features, especially during this time of social distancing, is our QR code system that every user can access in their app. MSMEs can accept fee-free, instant and 100% reliable payments through their QR code, which they can print out for use offline or screenshot and market online. It can be set up without the extra cost of a POS device, allowing more businesses to offer digital payment options to their customers.

What do you consider to be the most significant difference between commercial banks and FinTech companies?

 The most significant difference is the way in which these organisations approach the financial challenges faced by customers. Fintech businesses look at problems differently from more traditional businesses and are often quicker to innovate and develop new services. They also review customers’ responses to these new services and adapt quickly.

 How do you think the imminent competition between banks and FinTechs will pan out?

 Eventually – and while some banks may disagree on this – the template is there in the Western community, Fintechs and banks will collaborate to create greater experiences for the consumers. We are currently in collaboration with quite a number of banks as well to jointly deliver quality and topnotch experiences to our customers.

What needs to change now so that there is greater diversity in the Fintech sector in the next 5-10 years?

 Further adoption of the current wave of Fintech services will drive diversity, as it will drive investor confidence and encourage new services and operators to enter the market.

 Will FinTech improve the security of Banks or make them more vulnerable?

 Both Banks and Fintechs will continue to provide market-leading secure services. Factors such as security tend to be provider agnostic with factors such as regulation, market expectation and fraud prevention as the main drivers.

 Where do you see opportunities in Africa’s economy? Are there particular sectors you target?

 Replacing cash in economies where distance and travel time are a big factor will ensure that  there continually be opportunities for Fintech businesses prepared to invest in creating countrywide services.

As well as core services such as funds transfer and payments, a comprehensive ecosystem needs to provide products such as savings, investments, lending and insurance. These financial products can then be integrated into other industries, for example, commerce and logistics, to drive further scale through digitalisation.

How do you see Africa’s Fintech industry evolving over the medium to long-term?

 There will continue to be an extension of digital payment services and products provided to customers. Fintech businesses will continue to create innovative new services and ways to connect different services and industries to each other.

Network effects will continue to grow in importance in the consumer space, so I foresee a greater move towards interoperability by regulators, and ecosystems that invest to scale their services to the majority of consumers will emerge as winners. Some banks will partner strongly with promising Fintech businesses and these partnerships will take a large portion of the market share because they will generate greater trust with customers.

Editor’s Note: This interview was originally conducted by Victor Oluwole.