Frontier Fintech GPS #18 - 29th January 2025
Naked Insurance secures $38M to scale across Africa, Old Mutual dives into digital banking, DeepSeek shakes up Silicon Valley with its cutting-edge AI model and other stories that matter
Illustration by Mary Mogoi - Website
Hi All, Welcome to the 18th edition of Frontier Fintech GPS where I provide key insights on the top global Fintech news items that matter to you. This newsletter will be arriving in your inboxes every Wednesday morning. The idea behind Frontier Fintech GPS is to help you navigate the endless stream of Fintech news and get smart about global Fintech as it applies to Africa. To those who are yet to subscribe, hit the subscribe button below and share with your colleagues and friends. 🚀
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🇿🇦 South African Insurtech Startup Naked Raises $38 Million in Series B2 Funding
Naked, a South African insurtech startup, has secured $38 million in Series B2 funding, led by the International Finance Corporation (IFC). The funding round also saw participation from existing investors, including Naspers and Yellowwoods. Naked offers AI-driven, digital-first insurance solutions for cars, homes, and contents, focusing on transparency and efficiency.
The company plans to use the funds to scale its operations, enhance its product offerings, and expand its reach across Africa.
Naked is a digital intermediary working with Hollard, a licensed insurance company. I’ve always been of the opinion that insurtechs should go up the stack and become full service insurance providers largely due to the ability to better control claims payouts, the most critical piece in driving adoption in Africa. Nonetheless, the fact that South Africa is a relatively well advanced insurance market is working well for Naked Insurance. With around 12% insurance penetration vis-a-vis sub 2% in both Nigeria and Kenya, the market has developed to the point where the market is more efficient in terms of the full end to end insurance product. In markets like Kenya, insurtechs have struggled with the erratic claims processes in the market, weakening their overall proposition
🇿🇦 Old Mutual to Launch Digital Bank in South Africa
Old Mutual, one of South Africa’s largest financial services providers, is preparing to launch a fully digital bank. The digital banking platform will offer a range of services, including low-cost transactional accounts and savings products, designed to cater to tech-savvy and underserved customers. This initiative marks Old Mutual’s entry into South Africa’s competitive digital banking space, aiming to compete with established players like TymeBank and Bank Zero. The move aligns with Old Mutual’s broader strategy to diversify its offerings and capture a share of the growing digital-first banking market in the region.
Old Mutual has been working with 10x Banking for sometime ahead of this launch. The idea has been to enable individuals and small businesses to better have autonomy in their financial lives. The journey has been one of putting the customer at the centre of the story. Having said this, digital banking is a tough market to crack given that at the end of the day, an account is simply a store of value and most people haven’t come to expect bells and whistles from their bank. Having said that, we’ve written before about how the intersection between customer service and tech is usually the core enabler for new entrants in the market. In this case, digital native banks can provide a better digital experience which will resonate with younger banking clients. SA’s digital banking market is crowded and Old Mutual could use their brand recognition to get a leg up.
🇺🇸 DeepSeek Unveils Cutting-Edge AI Model to Challenge Industry Leaders
DeepSeek has launched a new AI model that is being hailed as one of the most advanced open challengers to established players like OpenAI and Google DeepMind. The model, designed for unstructured data analysis, demonstrates exceptional performance in tasks such as search, organization, and contextual understanding of complex datasets. This breakthrough positions DeepSeek as a serious competitor in the AI space, with potential applications in industries like finance, healthcare, and logistics.
I’ve been toying around with Deepseek and as I tweeted, it feels like you’re speaking to an intelligent but sophisticated person. It’s led to both panic and soul searching in Silicon Valley. It is said that it cost a fraction of what similar models cost to build and it required a fraction of the compute. The cynic in me thinks that to believe that, you must believe that every other research team working on AI is magnitudes of times dumber than the Deepseek team. I think the amount spent is much more in line with the other research houses. Nonetheless, some perspectives I find interesting;
China is not as far off as we were made to believe when it comes to AI research;
This matters because the CCP has guided their tech industry towards a focus on consumer surplus rather than maximum profits for tech giants. To this end, Deepseek as an Open Source project could be China’s philosophical and strategic approach towards AI dominance;
I wrote about Kamal and Little’s approach to AI, the discussion was around the cost of inference for local AI systems and Deepseek could significantly reduce these costs enabling more local AI applications.
It adds to the view that the winners in AI will be those operating at the app layer.
🇺🇸 White House Issues Executive Order to Boost Leadership in Digital Financial Technology
On January 23, 2025, President Donald Trump signed an executive order titled "Strengthening American Leadership in Digital Financial Technology." This directive aims to promote U.S. leadership in digital assets and financial technology while protecting economic liberty. The order emphasizes the importance of fostering innovation in blockchain and cryptocurrency technologies and ensures fair access to banking services for individuals and entities in the crypto industry. Notably, it prohibits the establishment or promotion of Central Bank Digital Currencies (CBDCs) within the United States, effectively halting any ongoing plans or initiatives related to CBDCs. Additionally, the order establishes the President's Working Group on Digital Asset Markets, led by David Sacks, to develop a comprehensive regulatory framework for digital assets and stablecoins within 180 days.
I wrote about Trump 2.0 and the impact on African tech, a summary of some of my views on the matter are;
A Bitcoin Strategic Reserve could weaken US’ Fintech leadership. It undermines Bitcoin’s ethos as a decentralised asset, signals to the world that the government’s faith in the dollar is weakening and lastly, it is in effect a form of quantitative easing;
The compliance environment of the last 20 years has affected Africa negatively due to the higher cost of compliance for global banks thereby leading to a withdrawal of correspondent banking relationships. Deregulation to this end is way overdue. Coincidentally, deregulation of TradFi could weaken Crypto demand in the continent;
Lastly, an outright ban on the CBDC could be self-defeating as large organisations and other Central Banks may want to experiment with programmable money backed by the American government;
🌍 Visa Partners with Moniepoint to Empower SMEs and Drive Digital Payments in Africa
Visa has announced a strategic partnership with Moniepoint, a leading Nigerian fintech company, to enhance digital payment adoption and support small and medium-sized enterprises (SMEs) across Africa. On top of this, Visa invested US$ 10 million in Moniepoint further entrenching this partnership. This collaboration will integrate Visa’s payment solutions into Moniepoint’s ecosystem, enabling SMEs to access secure and efficient digital transaction tools. The partnership aims to address key challenges faced by African businesses, such as limited access to financial services and reliance on cash transactions. By leveraging Visa’s global expertise and Moniepoint’s extensive reach, the initiative seeks to accelerate financial inclusion and digital transformation in the region.
When it rains it pours. Moniepoint has been announcing win after win and it reminds me of a conversation I had with a leading businessman who told me that capital and opportunities aggressively chase success. Visa needs large and growing players that can drive Visa adoption in the continent particularly due to the dominance of Mobile Money in the continent. Moreover, large organisations in the continent are best placed to drive digital adoption.
🇳🇬 PalmPay Leverages Zone’s Blockchain Network to Enhance Payment Capabilities
PalmPay, a Nigerian-based digital payments platform, has integrated with Zone’s blockchain network to improve its payment infrastructure. This integration aims to enhance transaction speed, reduce costs, and provide greater transparency for users. By leveraging blockchain technology, PalmPay seeks to address inefficiencies in traditional payment systems and expand its digital financial offerings.
As a blockchain based payment network, Zone’s core offering is the integration of messaging, reconciliation and settlements. Unlike traditional networks where these are done by different intermediaries, in Zone’s platform all three are embedded in the offering. This should effectively lead to lower costs, faster payments and higher reliability. I don’t have much visibility into their volumes, but they are adding more and more large players into their network. As much as traditional payments have multiple intermediaries, some of the benefits include the ability to reverse payments when disputes arise. Nonetheless if they can scale reliably, they are an attractive proposition given the low reliability of mobile payments in Nigeria that’s a function of patchy infrastructure.
🇿🇦 Sava and Access Bank Launch SARB-Approved Digital Banking Platform for SMEs
Sava, a fintech company, has partnered with Access Bank to introduce a digital banking platform tailored for South African SMEs. Approved by the South African Reserve Bank (SARB), the platform will offer features like business accounts, payment solutions, and financial management tools to address the unique challenges faced by small and medium-sized enterprises.
Sava has been quietly executing over the years and kudos to them on this. It takes a lot of hard work to get the approvals they’ve gotten. The business case for SME banking in South Africa is largely due to their larger economy and more mature SME scene. I wrote about the SME Banking opportunity in Africa particularly as it pertains to digital players. In South Africa, the attraction comes from the fact that an estimated 40-50% of SME’s are formally registered compared to sub 10% in Nigeria. Moreover, surrounding infrastructure such as credit scoring, KYC and a healthier economy make SA a preferred destination for companies that want to launch SME banking propositions.
🇿🇦 Stitch Expands into In-Person Payments with ExiPay Acquisition
South African paytech company Stitch has acquired ExiPay, a payment platform specializing in in-person transactions, marking its entry into the in-person payments space. This move complements Stitch’s existing digital payment solutions, enabling the company to offer a comprehensive suite of payment services for both online and offline use cases.
I suspect the way this transaction came about was that Stitch’s enterprise customers started demanding for in-person payment options. This is the natural trajectory for digital payment service providers given that enterprise clients want a unified experience particularly for visibility. It’s a similar journey for companies like Stripe and Pesapal. In a Whatsapp group I’m in, an entrepreneur who has been running a digital store for some time was talking about how a shift to physical stores has been a positive for growth. Given that Omnichannel is where businesses are heading, it only makes sense as a PSP if you can unify both digital and in-person payments into one dashboard.
🇵🇭 Philippine Banks Embrace Stablecoins for Digital Currency Adoption
Banks in the Philippines are increasingly adopting stablecoins to drive digital currency adoption and improve payment efficiency. The Peso stablecoin, PHPX, is a project between UnionBank’s UBX, Rizal Commercial Banking Corporation (RCBC), Cantilan Bank, and the Rural Bank of Guinobatan. It will initially operate on the Hedera network behind the scenes without users interacting with it directly. The Bangko Sentral ng Pilipinas (BSP) has supported this trend by promoting regulatory frameworks that encourage the integration of stablecoins into the financial system.
The idea of Bank’s launching stablecoins at first blush may not make sense given that banks are the biggest source of digital money in any economy. Nonetheless if you think of stablecoins on a blockchain as a settlement innovation then it makes a ton of sense. The Peso Stablecoin enables overseas Filipinos to make remittance payments directly to the intended payee. In Kenya for instance, the M-Pesa paybill enabled people in Nairobi to send money directly to a shop in the village rather than sending money to their relatives who may spend it in the wrong manner. I always urge people to think of Stablecoins and Mobile Money as a similar innovationT.
🌍 DP World Develops Multi-Currency Stablecoin for Global Trade Settlement
DP World, a leading global logistics provider, has announced plans to launch a multi-currency stablecoin designed to streamline global trade settlements. The stablecoin will leverage blockchain technology to facilitate faster, cost-effective, and transparent cross-border transactions for businesses. This initiative aims to address inefficiencies in traditional trade finance systems by providing a secure and scalable solution for multi-currency payments. DP World’s stablecoin is expected to enhance global trade efficiency, particularly for small and medium-sized enterprises (SMEs) participating in international commerce.
This is an interesting development. DP World is one of the world’s most forward thinking logistics players. Their aim is to unify all elements of trade and extract additional value. Given they’re relatively young compared to giants like Maersk and MSC, then they have less legacy debt to deal with in their transformation journey. Additionally, it doesn’t hurt that they have deep pockets. Embedding stablecoin based payments can help them unify the movement, payment and financing of goods. In Africa though, a lot of SME trade goes through fully integrated intermediaries that do logistics, trade financing and storage. A stablecoin won’t be enough to disintermediate such players.