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Digital lending: the new horizon for African banks, according to the CEO of Skaleet

By adopting Skaleet’s digital lending services, banks should be able to seriously compete with fintechs that have recently transformed the personal lending industry in Africa.

New financial players such as fintechs, telecom operators and neo-banks, which are increasingly asserting themselves in the market, are pushing traditional banks in Africa to develop new strategies so that they can stay in the race. .

Although telecom operators and banks cooperate in many areas, the rise of mobile money services offered by operators in Africa has led the continent’s bankers to appeal to regulators to convince them to limit the growth of these services. new entrants.

The next target for banks, which are trying to regain market share, is digital lending, says Hervé Manceron, CEO of Skaleet (photo) a Paris-based company that offers Core Banking services to financial institutions in Africa, Europe and in Latin America.

Today, digital lending is a real headache in Africa due to its cost and associated risks. African banks come up against the problem of interoperability on the one hand and the difficulty of developing this type of loan on the other. “, he analyzes.

Develop solutions

Founded in 2008, Skaleet, formerly TagPay, first created software called Near Sound Data Transfer (NSDT) that allowed financial institutions to remotely authenticate users to process payments.

Signing its first contract with a bank in Namibia in 2009, Skaleet’s initial business model was to offer mobile payment solutions to traditional lenders on the continent.

This has allowed banks to embark on digitalization to compete with telecom operators.

Expanding rapidly in Central and West Africa, the technology provider has since signed contracts in 22 African countries and has also expanded into Europe and Latin America.

Moving away from developing in-house digital infrastructure and services, Skaleet customers can now use the cloud to onboard and adopt Core Banking solutions in less than four months.

A software engineer by training, Hervé Manceron insists on the fact that the company is always looking to develop new technologies to meet the needs of banks in Africa and elsewhere.

The software provider then moved into the digital lending business.

Our core business today is providing technology to banks so they can compete with fintechs. We are convinced that the banks have the capacity to cope, but this requires them to act “, he explains.

Moreover, providing banks with the digital tools they need to meet the demands of the modern world is the mission that Hervé Manceron has set himself.

In 2018, the president and co-founder of Skaleet, Yves Eonnet, published a book titled Fintech: banks fight back.

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In the space of a decade, African fintechs, hitherto little visible, have established themselves and some are among the largest companies on the continent, showing rapid growth.

Three of Africa’s unicorns — these businesses valued at more than $1 billion — are fintech companies, ranging from payment platforms to digital lenders.

In lending, fintechs have managed to attract customers quickly by offering efficient service and algorithm-based loans, which do not require collateral or in-person appointments.

Traditional lenders, whose services are much more difficult to access, have thus lost customers.

It’s complicated for banks because they haven’t changed much in a hundred years. The only change was the switch to card payment, but basically nothing has changed in the core business “, adds Mr. Manceron.

However, despite the problems banks face in attracting customers, they should eventually be able to create more profitable models than fintech lenders, Manceron believes.

Most fintechs go into debt because they base their rapid growth on unproven business models that require heavy borrowing.

Banks, on the other hand, are extremely cautious and do everything not to lose money.

By adopting Skaleet’s digital lending services, banks should be able to seriously compete with the fintechs that have revolutionized the personal lending industry in Africa, Manceron said.

The CEO says the company recently launched an online lending service in the Democratic Republic of Congo (DRC) with Trust Merchant Bank, one of the country’s largest banks.

He insists that Skaleet will continue to encourage banks on the continent to become digital lenders in the years to come.

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