Mambu Blog.

Mambu is working at the intersection of two rather overloaded words: microfinance and cloud computing. From online, to conferences around, there are many debates as to what constitutes microfinance, the direction it’s going and the rapidly blurring lines between microfinance and other financial services. There’s little doubt that three billion people lack financial services, and that new technology will rapidly increase access to financial inclusion. And what roles is ‘the cloud’ – online technology to play in this future? In a world where most of Africa will soon have smartphones cloud computing and mobile will be game changers in the financial services industry.

“The transformative power of the cloud is driving innovation virtually everywhere.”

A recent article in Forbes makes a strong case for this decade being the ‘Decade of the Cloud’. At the core of financial services is information and “at the core of the information revolution is the cloud. At the core of the cloud is shared data and it changes everything. It creates transparency across and between users and developers. Extending the shared data concept to the business world will allow businesses to grow faster. It improves collaboration with their employees, their accountants, their customers and their suppliers, all in real time and accessible from anywhere.”

“Cloud computing, and the Software-as-a-Service model, will prove the single most impactful technical advancement driving business growth today and for the foreseeable future”

From the traditional mega-vendors like Temenos and SAP to new entrants like us and MFIFlex we can see the Decade of the Cloud beginning to take shape in the financial services space.

“The cloud will be the only long term, sustainable way to deliver IT.”

Financial institutions themselves need to adapt to these changes and will do so at their own paces for their own markets. Factors such as vendor-lock in, internet access in remote branches, and the ability to transform their own business will drive how quickly these institutions transition to the cloud. Those that navigate the transition successfully will find themselves well ahead of the competition in terms of business agility, real-time analytics, lower operational costs and the ability to scale faster and cheaper. Those that don’t, will likely find themselves in an acceleratingly handicapped position against their competitors and struggling to meet the rapidly changing demands of the next three billion people coming online and seeking financial services.

In an insightful read at Harvard Business Review, Bright Simons reiterates our beliefs how disruptive innovation and the ability to leapfrog technologies will help launch Africa into the global economic big leagues.

“The African enterprise has discovered IT just at the onset of cloud-thinking”

What are Africa’s big advantages? They do not have the burden of legacy like the West “where corporate policies on IT easily date back five decades, and where systems deployed two decades ago are still in operation”. This is a familiar story, one we’ve seen with mobile phones over landlines and now reiterating itself with cloud technology over legacy systems.

“The whole enterprise is likely to embrace cloud and mobility with a seamlessness and finality that is impossible to achieve in the West.”

The big example is African telecom companies being open-minded and rapidly moving to the cloud embracing its benefits in “cost and comfort”. And the emerging new financial services space is one in a prime position to take advantage of this revolution the most. Unlike western counterparts, the new organizations are not tethered to big and expensive branches. In fact, they can’t be: their clients are not coming to branches so must be reached in other innovative ways.

With over 60% of the continent unbanked this is a massive mobile opportunity to be seized. Mobile in the sense of both mobility of staff as well as new mobile and internet channels. Cloud technology also gives these innovative institutions a strong competitive advantage over older, slow established “incumbents without a clear plan” – they can roll out faster, have better services for their clients while at the same time saving themselves huge costs and risks.

“It is the perfect mix of ingredients for a massive boom: a huge, self-defining, market opportunity; incumbents without a clear plan; limited penetration by established vendors; motivating cost factors; favorable surrounding culture; and massive latent needs.”