Fintech companies should be more strategic in acquiring client information. This will enable them to provide in-depth product/service personalization and effective customer segmentation.
Technology has made information acquisition ubiquitous. About 2.5quitillion bytes of data are created or generated by humans every day through everything from cellphone-derived data, online shopping, social media footprint, digital pictures, and video, watching on-demand TV, purchase transactional records, and many more. This exponential growth in data can provide a plethora of information that might be very valuable.
Big data solutions, including artificial intelligence and predictive analytics, can make sense of these huge datasets, and provide commercially useful insights. According to a report from Frost and Sullivan, the Middle East and Africa’s Big Data Analytics market is forecast to grow by 28% every year until 2025, reaching a revenue of $68billion.
Fintech companies, particularly those that provide loans and savings products to their clients, should develop the capabilities to generate or acquire data as they design or develop their platforms. The nature and size of their primary market, the African informal sector, and their desire to achieve financial inclusion make it imperative.
Contributing 25 to 65 percent of GDP and accounting for between 30 and 90 percent of total nonagricultural employment (World Bank), the vibrancy of the informal sector is difficult to miss in the sub-Saharan African cities. Although these numbers provide a broad overview, the specific data that enable planning and financial intermediation are simply not there. According to the IMF, the informal economy, which it defines as an economic activity that falls outside the regulated economy and tax systems, such as street vending or unregistered taxi drivers, is hard to measure.
Working with other related service segments, fintech companies can be the last mile that generates these datasets that have so far eluded everyone, including development institutions.
There are at least 50 mobile phone subscriptions per 100 people in 45 of Africa’s 54 countries. 22 African countries have so far exceeded the global average of 107 mobile phone subscriptions per 100 people, according to the International Telecommunications Union (ITU). These numbers are still growing and provide a platform for strategic data acquisition, collation, and analysis.
Fintech companies that have this understanding can deliberately begin to acquire data in their operating environments or niche markets to build digital ecosystems that can be scaled. They can use their engagements to understand customer needs and cultural considerations. The financial and lifestyle knowledge and insights gained can help to create a comprehensive picture of the preferences, perceptions, and needs of prospects.
These new templates can be the building blocks for the development of hitherto unavailable personalized financial offerings that are critical in stimulating greater financial inclusion.