Moniepoint: Visa-Backed African Fintech and the Remittance Challenge

Visa's Investment and Moniepoint's Expansion

Visa’s recent investment in the Nigerian fintech company, Moniepoint, represented more than just validation of the company’s unicorn status. It indicated a significant shift in strategic direction for both entities.

Following this investment, Moniepoint, recognized for developing a leading business banking platform in Africa, alluded to integrating with Visa Direct. This integration aims to facilitate international payment pathways for remittances and cross-border financial transactions.

Introducing MonieWorld: A New Approach to Diaspora Banking

This strategy is now materializing with the launch of MonieWorld, initially focusing on the U.K.-Nigeria corridor. This marks Moniepoint’s first venture into financial services specifically tailored for the diaspora community.

However, founder and CEO Tosin Eniolorunda emphasizes that this is not simply another attempt to capture remittance volume. He stated to TechCrunch, “Our goal isn’t to create a remittance application; we are focused on establishing a comprehensive banking platform for immigrants.”

A Competitive Landscape

This undertaking is ambitious, as the remittance market, particularly between the U.K. and Nigeria, is highly competitive within the African fintech sector.

Migrants have numerous options available, including platforms like LemFi, Send, Nala, Zepz, and Taptap Send. These established companies boast user-friendly interfaces, competitive fees, and strong brand recognition.

The selection of a remittance app is often one of the first financial choices for new immigrants, frequently influenced by personal recommendations. Consequently, MonieWorld faces the challenge of entering a mature market and displacing existing habits.

While Moniepoint’s entry brings considerable scale and credibility, some industry analysts question the necessity of yet another remittance platform.

MonieWorld's Value Proposition

Eniolorunda explains that MonieWorld intends to assist new immigrants in maintaining connections with family and fulfilling obligations back home while they establish themselves in a new country.

Although there is limited differentiation in product offerings or pricing concerning remittances, MonieWorld’s website highlights its commitment to providing more favorable rates than its competitors.

However, Eniolorunda acknowledges that price competition alone is not a sustainable advantage, often leading to a “race to the bottom.” He stated, “We aren’t aiming to be the cheapest provider.”

“However, our existing technology, established processing infrastructure, and achieved economies of scale allow us to offer more affordable services to our customers.”

Leveraging Existing Infrastructure

Moniepoint has invested significantly in building infrastructure within Nigeria, encompassing payments, cards, credit, and compliance solutions for both businesses and individual consumers.

The company argues that repurposing this existing infrastructure for the immigrant community can deliver greater value compared to standalone remittance applications.

Eniolorunda notes, “We have successfully delivered accessible and affordable products in Nigeria, offering payment, credit software, and both debit and credit card services to our businesses and consumers.”

“We recognized that to complete this financial ecosystem, we could extend these same services to our target market residing in the diaspora.”

Establishing a Foothold in a Competitive Market

Remittances serve as the initial offering. However, the ultimate objective, according to Eniolorunda, is to provide a more comprehensive range of financial instruments, including credit building. This sector has experienced significant growth in the U.S. recently.

Digital platforms such as Zolve are facilitating access to financial services for immigrants, prioritizing credit establishment rather than remittances – Pillar operates under a similar model within the U.K.

The Importance of Credit History for Newcomers

“Establishing a credit history is crucial when settling into a new country. Individuals navigating unfamiliar territories require support in finding their footing.”

“A platform that recognizes their unique circumstances and aids in credit building would be immensely valuable,” stated the chief executive, while withholding details regarding potential future features of MonieWorld.

Remittance Market Dynamics

In 2023, the U.K. saw remittance outflows exceeding £9.3 billion. Nigerians living abroad remitted over $20 billion, as reported by the World Bank.

This corridor demonstrates the potential for multiple players to coexist and secure substantial market share. However, Eniolorunda posits that only those delivering a superior user experience will ultimately succeed, as pricing and speed have become standardized.

Expansion Strategy and Diversification

As Moniepoint expands its presence in African nations like Kenya, the company intends to introduce MonieWorld corridors catering to diasporas in the U.K., U.S., and Canada. This represents a natural progression in their strategy.

This approach will enable the decade-old fintech to mitigate risks associated with its concentration in Nigeria by diversifying its operational exposure – a proposition that proved appealing to investors during its latest funding round.

Challenges and Competitive Landscape

Despite the potential, significant challenges remain. Moniepoint is entering a highly competitive arena, and the extent of remaining profit margins is uncertain.

Eniolorunda anticipates inevitable industry consolidation, but believes Moniepoint’s infrastructure, regulatory compliance expertise, and profound cultural understanding will provide a competitive advantage.

Lessons from Agency Banking

“Our entry into agency banking with Moniepoint initially felt belated. Yet, the market expanded, and our current position demonstrates the potential for success,” Eniolorunda reflected on their 2019 venture.

“A similar trajectory could unfold with remittances. While the market is crowded, opportunities remain to either attract a larger customer base or introduce supplementary services.”

• Key takeaway: Superior user experience is crucial for success.
• Strategic Goal: Diversification beyond Nigeria to mitigate risk.
• Future Focus: Expanding financial tools beyond remittances, like credit building.