It has been nearly 20 years since mobile money was introduced in Africa, changing the way people transact, transact and access financial services. Since then, mobile money, and broader digital services, have been a major driver of financial inclusion on the continent.
However, economic growth remains highly dependent on traditional banking systems, and Africa’s infrastructure has not kept up with the financial needs and habits of people and businesses.
The entire African fintech industry is trying to change this by building better and more secure backend infrastructure for and among African banks.
This week, one such company, Nigerian digital payments giant Flutterwave, acquired another company, Mono, also based in Nigeria. The company enables interbank transactions, identity verification, and data sharing. Mono has been likened to Plaid in the US, allowing bank account holders to instantly and securely connect multiple accounts at financial services companies.
This agreement shows how rapidly financial services in Africa are evolving. The connective tissue that links mobile money, digital payments, e-wallets, and traditional savings and credit accounts is converging.
“Our goal is to make open banking a true reality and establish consent-based verification, payments and trust as the new norm across the continent,” said Mono co-founder Abdulhamid Hassan.
“Bringing[Mono’s]expertise into the Flutterwave family will help build what I call Africa’s ‘payments superhighway’,” said Flutterwave’s Olugbenga Agboola.
For context…
If you’re a bank account holder in the United States, you may remember how painful it was not that long ago to transfer money from one account to another. Remember micropayment verification, which could take days to complete? Now you can connect your bank account instantly through services like Plaid. PayPal, Venmo, and Zelle have made it easy and fast to send and receive money to and from people and businesses other than your own bank.
In Europe, systems such as IDEAL in the Netherlands and MBWAY in Portugal allow for free and instant transactions between accounts. Transferring money from one country to another is often as easy as entering the receiving account number into your banking app. It’s often free.
In Africa, the backend infrastructure that connects one domestic bank to another, much less that of other countries, is patchy and often riddled with security gaps.
“Payments, data, and trust cannot exist in silos,” said Flutterwave’s Agboola. “Open banking provides the foundation.”
A partner to scale
Agboola, who previously worked at Google and PayPal, co-founded Flutterwave in 2016 with Adeleke Adekoya and Iyinoluwa Aboyeji, who also co-founded software development staffing firm Andela.
“Flutterwave is a solution to some of the big challenges I witnessed while building Andela,” Aboyeji said when announcing the company’s launch. “Despite the entrepreneurial spirit and expertise in Lagos, businesses still have difficulty completing deals that would be on the back burner in most parts of the world. This is an exorbitant problem for the continent’s future growth, and one we felt we could no longer ignore.”
Flutterwave’s digital payments infrastructure makes it easy for businesses to send and receive payments from credit card companies, mobile money, and bank transfers, and is currently used in 30 African countries. (That growth has not been without controversy, including money laundering scandals and allegations of workplace bullying.)
The acquisition of Mono allows Flutterwave to fill a gap in its financial infrastructure that it was unable to develop internally.
For Mono, which has connected millions of bank accounts across more than 100 financial services companies in Nigeria, Ghana, Kenya, and South Africa, “joining Flutterwave brings instant scale and distribution,” while business and financial runway “will wait until the open banking landscape is ripe,” says Emeka Ajene of fintech newsletter Afridigest.
Terms of the deal were not disclosed, but it is reported to be an all-stock transaction. Both Mono and Flutterwave have said that Mono “will continue to operate independently.”
“Acquisitions were not on our radar,” Mono’s Hassan said. “We chose to partner with Flutterwave because together we have the opportunity to create something incredible: a more complete financial operating system for African businesses.”
