How this startup is working hard to create borderless digital banking in Nigeria

Naijaroko file photo (Michael Simeon)

Michael Simeon is the chief executive officer of VoguePay, a prime financial technology company that provides digital payment services to big corporations and small and medium enterprises. His company was one of the first payment aggregators in Nigeria to comply with International Financial Reporting Standards (IFRS) and other financial best practices, including the recent GDPR data protection framework. In this interview with Jumoke Lawanson, he speaks about VoguePay’s plans to create borderless digital banking, the prospects of Fintech in Nigeria, and other industry issues. Excerpts.

What is the history of VoguePay, and how did it grow to become a highly recognized digital payment service provider?

We started off in 2012 with a mission to enable any business owner in Nigeria accept payment online. With the launch of our free integration in 2012, over 17,000 SMEs were able to take their business online for the first time as they previously could not afford the $1,000 fee the incumbent was charging those days. Fast forward to today, we process over one million dollars a day and all these was not by my own strength alone, it was teamwork with our partners, supporters and people who have been following our journey over the years. Today, we have offices in Bahrain, Estonia, UK, Nigeria, and we provide service support to our clients/partners in Ghana, Uganda and other countries. Our customer base cuts across all continents as we are an international company with focus to provide solution that will link this continent to the rest of the world.

VoguePay, says it’s coming up with a digital-only bank, what will set this apart form other digital banks that are already operating in Nigeria?

We are turning banking into a borderless banking, centralized around harmonizing KYC (Know Your Customer) and creating a banking experience without borders. VoguePay believes that the future of banking will be as easy as being able to roam with your bank account, just as you can with your GSM number. For instance, if you have a mobile phone and you travel to another country like Ghana or UK, your mobile phone will still work without you getting in touch with the network operator in those locality. The digital bank capabilities that we created would be given to a lot of banks and some banks have already started taking advantage of it. We would be deploying those capabilities this year. The difference between what we do is the unique experience and the services provided.

I am very glad that we would be starting it out from Nigeria, although some countries in the Gulf region want to quickly take advantage of it to be the first mover in the market. But we are proud Nigerians and we want to give it to certain banks and let Nigeria experience and enjoy the benefits. It would change how we Nigerians save today and by that, I mean it would change how you invest today. It would change how you travel in terms of how you source your money to travel, how you move; your relationship with your transaction will change. We just can’t wait to really go live with some of these things. We have been working on this solution for about 14 months and it will be launched to more than 6 million users.

VoguePay is a thriving Fintech company with global recognition, how would you rate Nigeria’s Fintech and e-payment sector and what do you project for 2019?

A lot is happening in FinTech space generally. This is visible from the amount of activities happening in InsurTech, e-payments, lending and so on. One major trend I notice is that more fintech companies will be rolling out banking-like services. I think the convergence happening in the market would really be on an upward trend this year, as more and more fintechs will consolidate and we would start seeing companies that have substance rather than companies that make noises.

From our own perspective at VoguePay, we have already developed all the banking suite even more now. But the way we deployed, we would be working with various banking institutions across microfinance, retail and investment banking to provide efficiency to increase customer capabilities, analytics and transactions.

How has VoguePay been able to sustain operations without gaining access to foreign funding as in the case of so many startups in 2018?

I have been asked this question a lot of times and I always say that getting funding is not a badge of success. It means someone believes in you enough and decides to bet their money on you with the hope that you will provide return on that investment. We have taken a totally different route. As a business, our growth philosophy is to build partnerships that generate revenue. I can categorically say that in fintech space today, we are arguably the only fintech company that never raised money, but also profitable with monthly transactions in millions of dollars. Therefore, we are not easy prey to a lot of venture capitalists. Someone can’t come to us and say let me take 50 or 30 per cent. They know that the math doesn’t add up; we are not desperate. Of course, at some point when the right partner comes we would recognize that. Raising money is good if you can do a lot of good things with the war-chest and it will also help with public relations.

How can emerging and aspiring entrepreneurs raise capital for their businesses?

Entrepreneurs will survive without raising funding, but they cannot make it without paying customers. Therefore, it is more profitable to devote more energy to growing the business through revenues than to chase for funding. The energy of building customer is highly valuable than VC funding. What I would say is, entrepreneurs should always look at strategy that will take them to the top and not to the bottom and they should never think that because someone gave you money that means that you are already successful.

What are some of your recommendations on growing business and the regulations affecting SMEs and fintechs in Nigeria?

What I will always say to people is, identify your market and master those market. Understand the psychographic of who you’re serving, and the market you are trying to capture. Secondly, never underestimate the local know-how of doing things. Thirdly, always seek to abide by regulations and where none exists innovate first ahead of regulations. A classic example is crowdfunding and ride hailing services.

Would you say that the regulations in Nigeria encourage Fintech business growth and sustainability?

I believe there is room for improvement for the regulators. As fintechs, one expects to see regulations that foster innovations. One of such laudable innovation will be to create a sandbox environment for fintech startups to launch their innovation in controlled environment. Startups need to always know that they should never stop creating products that is fit-for-purpose but within regulatory parameters. These responsibilities lie with the Central Bank of Nigeria. In fact, some of the Central Banks we have worked with outside Nigeria are engaging us more than our own apex bank. They create very attractive proposition for fintechs and other startups to develop advanced solutions that would attract international players to come and reside in their own territory, thereby creating employment.

What are the challenges VoguePay has faced in terms of its operations in Nigeria?

I have to say for VoguePay, 2018 was our best year. That doesn’t mean that there was absence of challenges. On one side, the local pricing mechanism is not sustainable for local transactions such that even if you have a lot of customers transacting, those transactions might not be profitable for you as a business. Thankfully, we have been able to create additional value proposition that goes beyond payment. Based on this insight, one of the mantras that drive our value proposition is understanding that payment itself is no longer consumers’ appetite. Secondly, the pattern we are seeing is, people want to have more control of the payment experience from their own side. So, rather than us building a platform that is for everyone, we are now looking at individual unique experience. We rise up to that, we are happy that a lot of customers are satisfied with that. Another challenge we had when we started getting a lot of French speaking customers was to rely on Google to interpret what they’re saying. But we noticed that with the level of French speaking customers we were getting, we couldn’t just rely on Google translator, so we had to set up a team to address that. Now, VoguePay in French is in development, we have French speaking customer service. So these are the small tedious things that really matter to our business but overall, 2018 has been our best year so far.

What kind of things do you envision that Nigerians should look forward to?

I am really hoping that there would be positive policies towards technology advancement because this is the key driver to our economic growth, and not oil. Even though the price of oil is what Nigeria is depending on for foreign exchange, oil is already facing existential threats from two angles.

One is technology threat, that is, people are spending billions developing new products like lithium battery, electric vehicles and solar energy alternatives. This will affect purchase of crude oil. The second threat is environmental issue as the world will shy away from “dirty” oil. The technology is coming into place, they’re replacing these things. As a nation, we don’t have to wait until things collapse before we start making adjustments. You can see why it must be in the interest of the government to invest in technology to ensure that we don’t lag behind.


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Written by NaijaRoko

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