In this publication, we share our perspective on the size and attributes of the market opportunity for digital in financial services and the economy at large.
Over the past decade, we have seen digital reshape the agenda of many businesses and produce new leaders in several sectors. We are witnessing a shift in the balance of power from traditional value-chain business models to digital platform models. For instance, seven (7) of the ten (10) most valuable entities (by market capitalisation) in the world are digital platform models. These entities (Apple, Google, Microsoft, Amazon, Alibaba, Tencent & Facebook) cut across various sectors of the economy and reinforce our perspective that digital platform business models are industry agnostic. They have an overarching focus on the customer, particularly retail customers. Google, Apple, and Alibaba have 2 billion, 588 million and 450 million users respectively. Bottom-line is that numbers are essential to creating value! The source of value for digital business models is having the capability to acquire new customers (users) exponentially while ensuring that innovation produces a steady flow of products and services to keep users engaged, excited and promoting the brand.
Digital platform businesses are also leading a quiet revolution in Nigeria and indeed Africa. Over the last 18 months, Jumia (an eCommerce platform) and one of Nigeria's leading Fintechs attracted investments of $425 million and $250 million respectively. Based on reports, these entities are valued at over $1 billion each. They both have footprints across Africa and are looking to become formidable platform businesses. We also note foreign investments into Nigerian Fintechs such as Flutterwave, Paystack, etc., accelerator programs by Tech Giants (such as Google) and the growing reputation of Nigeria as a leading digital destination on the continent.
In this publication, we share our perspective on the size and attributes of the market opportunity for digital in financial services and the economy at large. We explain the distinction between the ‘Underserved’ and ‘Unserved’ from a financial services standpoint. Our analysis indicates that the opportunities with respect to the ‘Underserved’ are significant, not well understood and available to be seized by entities willing to approach the market differently – through digital. The ‘Unserved’ speaks to the Financial Inclusion challenge. Progress continues to be limited and slow; we offer perspectives on how to accelerate the financial inclusion agenda by employing digital.
Given our emphasis on digital platform business models, we unveil the attributes and components of a digital platform. Our publication provides insights on how digital platform businesses can ramp up customer/user base exponentially by winning the customer experience (CX) and user experience (UX) challenge; accelerate time-to-market for products and services through Open APIs; delight customers and engender advocacy by leveraging the power of Analytics, Robotics & AI; and scale quickly, often across geographical barriers by riding on the Cloud. Digital platform businesses also require a different approach to governance – a focus on agility, speed and innovation. The capabilities and culture necessary to drive a digital agenda are often underestimated.
Lastly, government and regulators are making some progress with regards to creating an enabling environment. The CBN’s initiatives on creating a national Sandbox for Fintechs, the establishment of an inclusive stakeholder group for ongoing communication across the Fintech landscape and guidelines on Blockchain and Crypto-currency are noteworthy. There is a rich pool of evolving regulations across the globe that provide a baseline to build on. Accordingly, we have articulated a 4 point regulatory agenda on digital spanning Alternative Finance, Open APIs, Data Sovereignty and Fintech Enablement.
We hope that you find our publication insightful regardless of where you are in your digital journey and look forward to receiving your feedback and/or comments.
© 2017 KPMG Professional Services in Nigeria, a limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.