04 Feb 2021 / Article

Weathering the storm | Banks, telcos, fintechs: ‘I swear by coopetition’

At 43, Dakar-born Omar Cissé is CEO of InTouch, a leading force in the Senegalese and West African tech scene. After graduating from Dakar’s polytechnic university Ecole Supérieure Polytechnique de Dakar, the computer engineer quickly became a serial entrepreneur, creating by turns CTIC Dakar, Teranga Capital and, ultimately, InTouch. The latter, a pan-African fintech firm founded in 2014 and specialising in the aggregation of mobile payment methods and the integration of digital services, is about to become his most successful business venture to date. With operations in 15 African countries following the company’s €3.7m capital raising in 2017 (the largest amount ever raised by a start-up based in French-speaking Africa), InTouch had an amazing year in 2020, significantly benefiting from the acceleration of digital adoption in the wake of the health crisis. Mr Cissé, whose ambitions for his company are only matched by those for his continent, aims to help make financial inclusion the norm across Africa and to show that it is indeed possible to create start-ups with a continental scope. Now that his gamble is about to pay off, he agreed to answer our questions about what the crisis has meant for his company and what role InTouch has to play in building this highly promising ecosystem of African tech firms.


How was InTouch’s performance in 2020?

We did well despite the big scare back in April. When the pandemic started to become an increasingly global issue, a lot of countries began to close their borders and implement restrictions at the local level, and as a result our revenues fell dramatically. At that point in time, we projected that our annual performance would fall by nearly 70% year on year. We were lucky in that the crisis gave our business a considerable edge. We were already part of the digital economy and perfectly used to working remotely since we have operations in multiple countries. The relative panic that spread at the start of the pandemic quickly gave way to an acceleration in digitalisation. And, in no time, companies began approaching us and asking us to provide them with digital payment solutions. To give you an idea, I’ve never received so many phone calls in my life as I did during that first weekend in May. The very next week, we were in the process of signing tens of contracts and we went on to sign hundreds over the course of the year. In the end, 2020 was a record-breaking year for us. This past December was the best one we’ve ever had since InTouch’s founding, with transactions peaking at €5m in one day, compared to a high of €3m in 2019. In 2020, we processed a little over 40 million transactions (up 33% year on year) for a total amount of just under €1bn (up 100% year on year). 


Are you offering new services in light of the pandemic?

Yes. For example, we launched donation payment services to support the Senegalese government and, downstream, in the area of distribution, we’re working with Oxfam and UNICEF. We’ve also adapted our services to the needs of users by factoring the public health situation into the customer experience. Today, we assist some 25,000 merchants in seven African countries: Burkina Faso, Cameroon, Côte d’Ivoire, Guinea, Kenya, Mali and Senegal. At the end of 2020, we expanded our geographic footprint with the launch of the pilot phase of this service in Nigeria, Tanzania and Uganda. We are persuaded that this crisis has established new habits – and not just short-term behaviours – and we hope to capitalise on these changes.


What was it like entering new markets in the midst of the pandemic?

It was quite complicated, even if you take the pandemic out of the equation. Intra-African trade is difficult. Sending a wire transfer between countries that share a border, like Senegal and Gambia or Senegal and Guinea-Conakry, sounds straightforward enough but in reality it’s no easy feat. To transfer money to our bank account in Guinea, it’s often easier to go through an intermediary country in Europe, such as France! The agreements our countries have with each other don’t make these types of transactions any easier. Regulatory frameworks vary widely from one country to the next and one region to another. The process of establishing a business in Morocco is completely different from the formalities in Nigeria or South Africa. On top of that, our industry has to deal with very high foreign exchange and convertibility risk. 


So, is the assertion that digital firms have an easier time entering new markets inaccurate?

Being a digital firm definitely simplifies the process of getting your products on the market and into the hands of consumers, but regulatory barriers that we cannot escape persist. For instance, there are countries outside our region where the mobile money sector isn’t mature enough, so setting up shop there can be cumbersome. To deal with these constraints, you have to be resilient and willing to adapt. We’ve opened around 15 subsidiaries, 10 of which are up and running, in various countries. Getting a business going in 15 different countries – meaning you have to go through the process of opening bank accounts and getting a business permit – may sound inconsequential but, in reality, it’s an adventure every single time. We’re taking up this challenge as I speak and, soon enough, we’ll be able to boast a truly pan-African presence. 


What deadline have you set for yourself to reach this goal?

By 2022, we will have operations in 25 countries and, by 2023, our company will have a foothold in 38 out of Africa’s 54 countries. 


Taking the example of Paystack, what makes fintechs successful and gives them an edge over other African start-ups?

Fintechs address a long-standing problem in Africa, one that start-ups are all too familiar with: how to generate revenue. New payment solutions are the answer to this question. Mobile money pioneer M-Pesa’s success in Kenya precipitated a start-up boom. Without digital payment methods, the start-up business model is difficult to monetise. If fintechs are booming today, it’s also because they provide real solutions and are able to monetise their business model.


Is that the only reason for their success?

There’s also an entire ecosystem being built around the payments industry. Our business has the advantage of being backed by telecom operators that are major players in the ecosystem today. These operators are certainly an accelerator but we need to be mindful of the reality that they also have the potential to become a stumbling block. Unfortunately, a lot of operators see fintechs as competitors, which shouldn’t be the case, in my opinion. For now, what we call “telcos” are growing at a swift pace and pulling along fintechs in their wake. There’s still plenty of room to grow because most fintechs continue to be present in specific markets. We have operations in other African countries and intend to take full advantage of these markets’ strong growth potential. In the coming years, we’re going to see more and more start-ups developing vertical solutions in logistics, transport, e-commerce, etc. The potential is vast. And that’s why investment funds are now scrambling to put their money into fintech companies. 


The African Continental Free Trade Area (AfCFTA) has become a reality in a number of countries. What changes are you anticipating? 

On the face of it, the single market will make our daily lives much easier. As I said before, trading goods from one country to another has always been a very complicated affair up until now, if only because of large differences in how customs duties are applied and their cost. However, in my understanding, the AfCFTA will greatly reduce these complexities. 


But doesn’t facilitating trade pose the risk that new rules specific to fintech firms will be adopted?

Indeed, at this point in time fintechs are largely escaping the notice of regulatory authorities in certain regions. Amid the health crisis, these firms have taken on an even greater dimension in the ecosystem, which means appropriate governance needs to be put in place to regulate as well as guide them. Regulation is crucial, but we need smart regulation. If companies aren’t regulated and each player does whatever it wants, we run the risk of losing consumer trust. But that doesn’t mean we should overregulate, either. Regulatory authorities should adopt an approach focused on supporting firms. Setting up regulatory sandboxes, which allow companies to test new innovations in cooperation with authorities, is one such example of this kind of approach. 


What impact could the rise of cryptocurrencies have on this ecosystem?

It could end up propelling us forward, but there again, regulations have to pave the way. I truly hope that the various cryptocurrencies will find a middle ground whereby Bitcoin and other cryptocurrencies can be used everywhere, as it would help reduce trade barriers. Cryptocurrencies could be a viable alternative to African currencies, which struggle with convertibility.


There is a huge market for banking the African population and banks and telecom operators are in fierce competition over it. What role do you think fintechs will play as they battle it out? 

A new ecosystem is being created and gradually built. Every player is going to carve out a niche. Banks will continue to play their role, though it might be a bit different from what it was before. Telcos will take on a bigger role by increasing their proximity to consumers. As for fintechs, they’ll build the vertical businesses that telecom operators would never create. But that probably won’t stop the market positioning battle we’re seeing unfold. Now, how far will banks go to help out consumers? To what lengths will telecom operators go to eat into banks’ market share? It’s still hard to say.


But these various players don’t want to talk about competition, preferring instead to speak in terms of cooperation. Is this actually the case?

Personally, I swear by “coopetition”. Banks need telecom operators and vice versa. Banks are increasingly coming to us because fintechs enable them to accelerate digitalisation in areas like digital lending, payment method integration, interconnection with operators, etc. The companies that will still be around tomorrow are those that manage to become specialists and to strengthen their business in a more comprehensive way. We are one such company whose aim is to make doing business easier for all these players. 


And what about the other fintechs with which you often share the same markets?

Competition is never going away, but I believe that if you’re a fintech company and not interested in “coopétition”, then you won’t make it. For instance, in Kenya we work with Interswitch and in Senegal Flutterwave uses our solution. In other countries, we’ve teamed up with Cellulant. And in South Africa, we have a collaboration with MFS. One company alone will not be able to meet all of Africa’s needs. Working together will allow us to succeed and we have to accept that we’ll sometimes compete for business in certain markets. But that isn’t the most important thing. What really matters is how we work together to grow, and indeed that’s what we’re witnessing right now.


What motivates you in your day-to-day work?

Africa still has a very informal entrepreneurial culture, with a small number of people who get rich, create few jobs and, unfortunately, don’t contribute to a shared economy. I strongly believe we should take a different approach to entrepreneurship and set up an ecosystem that’ll make this possible. Every step in my career has gone in this direction. I created my first company after graduating university. Then, I launched an incubator to support entrepreneurs, but that wasn’t enough, so I created a fund. And finally, for the first time, I was seeing entrepreneurship, including its challenges and barriers, at a fully pan-African level. So, my goal is quite simply to continue down this path and to build this ecosystem.


What are your long-term ambitions for InTouch?

I want InTouch to become a pan-African champion – one that is involved in building an entire ecosystem around the payments industry and entrepreneurship. We aim to facilitate access to payment solutions and the distribution of digital services all over Africa. In a very short space of time, we’ve shown that it’s possible, even though it’s particularly challenging for an SME based in French-speaking Africa. We also hope to serve as a model and to show young Africans that success is possible if you believe in it and surround yourself with good people and solid partners. I’m always telling my colleagues, “Hey now! People are watching us. Failure is not an option!” I say this not just for the young folks watching us, but also for future generations. No matter where we end up, we’ve already made African entrepreneurial history . If we succeed, we’ll work to ensure that Africa is seen as a land of opportunity and a place where savvy African entrepreneurs thrive. 

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