Ukheshe: Digitizing Banking And Payment Across Africa And The World

Ukheshe Technologies aims to be one of the next unicorns to emerge from Africa. With the fintech space getting more crowded to meet the rising demand for financial solutions, the South African fintech firm has set its sights on the rest of Africa and the Middle East, Asia and Europe. We have a discussion with the company’s CEO Clayton Hayward on the company’s impact and future plans.

According to a new report by the United Nations Conference on Trade and Development (UNCTAD), online retail sales grew markedly in several countries in 2020 with global e-commerce sales jumping to US$26.7 trillion globally in 2019, up 4% from 2018. These include business-to-business (B2B) and business-to-consumer (B2C) sales and was equivalent to 30% of global gross domestic product (GDP) in 2020.

These statistics show the growing importance of online activities. They also point to the need for countries, especially developing ones, to have such information as they rebuild their economies in the wake of the COVID-19 pandemic.

At the core of e-commerce is fintech. According to the World Bank, financial intermediation and financial inclusion in sub-Saharan Africa remains low, despite progress in recent years. The Bank notes that, on average, countries in sub-Saharan Africa continue to have a shallower financial system than those in other developing regions of the world. For example, in terms of financial inclusion, only 20% of the population has a bank account compared to 92 percent in advanced economies and 38% in nonadvanced economies, noting that under-investment, poor infrastructure, and comparatively low levels of financial literacy have contributed to the region being underbanked.

Ukheshe facilitates fintech uptake

South Africa based Ukheshe is one of the leading fintechs in the African continent with a growing presence in several countries, Europe, Australia and Asia.

The fintech company offers a range of seamless API payment experience, digital payment integrations, issuing and acquiring of physical and virtual cards and has created a user-friendly digital service hub that powers innovative digital-first fintech propositions for many of its customers and partners across Africa.

Ukheshe Technologies started as a software development company focused on building technology for the banks and telecommunication companies (telcos) and later decided to build its own digital bank, because they saw a big opportunity in the underserved markets in the digital banking space.

The company’s founders, led by the CEO Clayton Hayward, started the fintech firm, hoping to tap into the exciting fintech space that several estimates point to rise into the trillions of dollars in the next few years, especially if the large number of the unbanked population in developing economies of Africa can be brought into the fold.

“It has been a really exciting journey. We added close to a million clients in our first year or so of operations and in that journey, we realised that the big opportunity for us was to leverage this technology framework that we had built to really help banks and telcos, governments, insurance companies build really powerful fintech proposition,” said Ukheshe CEO Clayton Hayward.

“So, we decided to pivot the business 18 months ago to focus whole heartedly on being an enabling platform for fintech, banks and telcos across the continent who really wanted to deliver quickly a powerful value proposition in fintech space, whether that’s a cheque banking proposition on WhatsApp or tape on glass or mobile phone or virtual card issuing and anyone of our digital propositions,” adds Clayton.

According to the CEO, Ukheshe sees itself as one of the leading providers of fully integrated propositions of digital KYC, virtual cards, physical cards, QR codes etc. as they continue growing in the continent.

“When somebody is trying to launch a proposition whether you are an international remittance company looking for a partner with a footprint across the continent or a multi territory bank looking for a partner, we want Ukheshe to be top of the mind in that discussion.”

It’s API platform Eclipse allows for payments to be made and received all via a single API solution unlike any payment service or solution. The firm is Masterpass certified, which means it can accept payments from any Masterpass enabled app and most banking apps.

Clayton Hayward, CEO of Ukheshe Technologies

The company’s Tap2Pay is a card payment system designed for secure, quick, and easy payments for small payment amounts through the use of special antennas embedded in them, which are used to transfer information on Tap to Pay terminals. It is ideal for merchants who process low ticket value transactions, such as fast-food restaurants, petrol stations, supermarkets, convenience stores, movie theatres, among others.

Ukheshe also has availed its Chat Commerce service, which is fast becoming the way to support their customers as they search for products, place orders, pay bills, buy airtime, and much more. Clayton says that as the shift to cashless payments continues to gain momentum with digital commerce growing at 2x the rate of physical, reaching more merchants and consumers, as they demand an ever more personalised and attentive shopping experience.

The firm’s KYC solution allows companies to protect themselves by ensuring that they are doing business legally and with legitimate entities and also protects the individuals who might otherwise be harmed by financial crime.

Tapping into opportunities in Africa

According to recent report by FSD Africa launched in 2019, there was a potential US$5.1 trillion of fintech opportunity in Africa.

“Africa is seen as the last frontier from the emerging markets points of view. We have a huge population in the continent, huge underserved markets and we see e-commerce penetration still in the single digit percentages – that’s where all this growth is going to come from. It is about delivering financial inclusion to the mass market, delivering the access to e-commerce, delivering access to financial services all via these new digital channels,” he adds.

“Africa has always managed to leapfrog technology because of where it has come from. Even in the mobile space, most of the technologies in GSM were pioneered in Africa and that is also going to happen in the financial services because we have such an underserviced population. We now have ability to deliver new innovative lending solutions, payment solutions and anything in that space that will not be encumbered by legacy systems, we can really go out there and deliver something new and exciting,” he emphasizes.

After initially launching its operations in South Africa, Ukheshe has set its bold ambition to expand its operations globally, starting with the rest of Africa, where it has already signed several successful high-profile projects and partnerships in countries such as Kenya, Zimbabwe, Zambia, Namibia, Nigeria, Malawi, Botswana, Angola, Tanzania, Rwanda, Burundi, Democratic Republic of Congo, Mozambique and Ghana.

In order to accelerate its business and impact across Africa, the company has of late sought a number of new partnerships with leading players in the sector. The CEO says that their partnerships across Africa are going to deliver big returns, as they have active partners across 40 territories in Africa, including banks, telcos and other players. He adds that the growth opportunities for them in Africa offer very exciting prospects for their future.

In March 2020, it has signed deals with Tanda, a Kenya-based retail-tech start-up Tanda, which will leverage Ukheshe’s Eclipse API to increase their digital banking offering in Kenya and East Africa to include QR payments, digital wallets and the issuing of physical and virtual cards – a move that will empower Tanda agents and merchants throughout East Africa to implement 100,000 physical touch points within the next 2 years.

In February 2020, it announced the conclusion of an agreement with the Kenya-based bank, KCB Bank. Through the agreement, KCB will sponsor Ukheshe’s Bank Identification Number (BIN) number, which will allow Ukheshe to immediately issue both physical and virtual cards across East Africa where KCB has an extensive footprint.

“By joining forces with KCB we are well-placed to address several open-loop market opportunities while boosting wider consumer adoption. Payment options across various segments will benefit such as payroll, companion cards, multi-currency prepaid cards, travel cards, and gift cards, together with social security and other government benefit programs such as insurance claims,” said Victor Ndlovu, the then Vice President of Ukheshe Africa.

In its home market South Africa, Ukheshe, in collaboration with the global cloud communications platform Infobip, developed and launched a WhatsApp payment gateway for use by Telkom South Africa customers. South Africa’s first digital wallet platform, the solution is the first WhatsApp channel to enable payments using QR codes in the country. Ukheshe says the solution allows Telkom SA customers to send money quickly and securely to anyone with a mobile number, with no need for another app or additional software.

In another move, the fintech, in partnership with financial services provider Nedbank and Mastercard launched Money Message, a payment platform that lets small and micro businesses receive in-chat payments from their customers via WhatsApp. The solution will enable merchants to send an invoice requesting payment from any customer through WhatsApp and their customers, in turn, can quickly settle a payment directly from the platform. “The need for a diverse range of contactless payment methods is more important today than we could have possibly imagined, as we seek to rebuild the economy by giving businesses the ability to transact in a safe and secure way,” said Chipo Mushwana, Nedbank’s Executive for emerging payments, at the signing of the deal.

Ukheshe digital wallet
Ukheshe whatsapp bill payment

“What’s great about the way we have developed our technology is that our partners can leverage that ecosystem very easily. What would have taken them 12 or 18 months to form a relationship with Mastercard, secure bench sponsorship with a bank both technology and integration, they can now access this API from us in real time and build a solution and take to market. From a time to market point of view, is see support a lot of support for fintechs across the continent.” He says that even with all the great ideas, compliance, regulatory, technology hurdles and relationships hurdles will slow these things down – hence the need to work with a facilitator like Ukheshe to deliver faster, more seamlessly.

“We see ourselves as the accelerator in the continent of Africa for this. We have done all the hard work; we have got all the building blocks, so we see ourselves as that partner that enables everybody, from that small fintech like Tanda to a big telco like MTN to leverage exactly the same API to deliver value proposition in the market they are playing in,“emphasizes Clayton.

Acquisition and fundraising

The year 2020-21 has seen a lot of merger and acquisitions in the fintech space in Africa, which have potentially changed the game in the continent.

For Ukheshe in addition to collaborating with numerous blue-chip banks, telcos and fintechs, it has built strong alliances with Mastercard while acquiring two companies and raising just under US$6.4 million within the last two years.

In one of the deals, Ukheshe acquired Oltio from Mastercard, the company that developed the digital payments platform for Masterpass, Mastercard’s QR code payments service.

The deal, whose value was not disclosed, is a “natural fit” for the company, according to Clayton, adding that it enabled the fintech to continue providing fintechs, telcos and banks with payment solutions and services that will further deepen financial inclusion in the region.

Ukheshe has an established partnership with Mastercard and is a participant in the payment giant’s Accelerate programme. The programme allows it to tap into Mastercard’s technology, data, expertise, and global network of corporate clients and fintechs to help scale its operations globally.

“We will continue to look for potential acquisitions in these new markets to further support Ukheshe’s growth and strategy as we pursue our goal of reaching unicorn status within the next three years. Ukheshe is excited to be at the forefront of the rapid shift towards innovative digital-first solutions, especially in markets that are ripe for disruption,” the CEO said.

However, Clayton is quick to add that the company will want to remain a neutral player and will not be looking at having a big telco or bank become a shareholder in the business in the future. “Realistically, we will never have a bank or a telco as a shareholder because we will end up in a competitive situation. When we have a bank as a shareholder, then other banks will say we do not want do business with you, same as a telco so want to keep our independent space,” declares Clayton.

“I think there is a lot of room for consolidation so we are aggressively looking for additional acquisition in the continent to bulk up the business and I think the next step for us will be a listing. We are very keen to list the business most likely on the London Stock Exchange and we want to create the next fintech unicorn. You have seen lots of news in the press recently, like Flutterwave achieving unicorn status and I believe Ukheshe has the ability to become that next unicorn and become a real player on the continent.”

Asian and global expansion 

Apart from its regional African reach, the CEO says the fintech will focus on establishing significant long-term partnerships in strategic locations within the Asia Pacific region, Europe, and the Middle East as it unravels its global growth strategy.

In this regard, the firm recently filled key senior positions to drive its agenda, with the announcement of Donovan Drew as President: Asia Pacific; Paul Selibas as President Project Engineering, based in Europe; together with Chris Pillay as VP of Finance, located in Dubai. It further announced the appointment of Anton Coertzen as President of Strategic Partnerships. He will be responsible for growing the business through key partnerships which complement the company’s business development and product innovation strategy, as the fintech continues to entrench its position as a formidable payment technology specialist within the business-to-business sector.

The CEO says that following the announcement of its global expansion plans, Ukheshe will focus on establishing significant long-term partnerships with banks, telcos, fintechs, governments, and payment associations across Africa as well as in other international locations.

In May 2021, the fintech announced it is expanding its footprint into the Asia-Pacific region as it introduces innovative digital-first payment solutions via key partnerships in what is emerging as a lucrative growth market for the B2B payment technology specialist. Clayton says the company aims to partner with local institutions in the region by offering credible, agile solutions in an ever-changing market.

“Our payment technologies also solve for the problems of expensive acceptance rails and carrying cash, particularly in markets within Asia-Pacific where digital wallets are expected to become the preferred online payment method over the next four years,” he says.

Ukheshe is one of the few African businesses which have ventured into the Asian market and according to the CEO, that is an amazing thing. He likens the decision to MacDonald’s’ burger whose exchange, financial value and transaction is the same irrespective of where it is bought.

“What is amazing with payments is that lets say you are buying a McDonald’s burger in Nairobi or Singapore: it is the same burger, same exchange value, same financial transactions. Whether you are sitting in New York, Lagos or Johannesburg, the challenges you have are all the same. What is great with fintech is that we now have the ability to grow our business on the back of our partnerships with the likes of Mastercard. So, where Mastercard are looking at their digital first strategy across the world, we become a very attractive partner for them to pull into these opportunities, because we are already integrated into their core technologies, we understand their strategy, and makes it quite easy for us to go into player solutions in these markets.”

“One of the biggest changes that has happened is Covid-19. Covid-19 has changed the way people do business. Two years ago, you could not do business in Africa without face-to-face meetings – you would have to fly to Nairobi, Lagos or DRC and you would have to have a suit and tie, shake the hands, go for dinner etc. Covid-19 has taken those formalities away and for us now, we can scale exponentially. Companies have now adopted digital ways of transacting business. There’s exponential efficiency now. Covid-19 has made demand for digital financial services more important,” states the CEO.

Competing in Africa and beyond

According to the CEO, as the fintech enters into the rest of the continent and beyond, they do not see other fintech like mobile money such as M-Pesa as competitors, but rather as partners.

“We see them as partners. Remember we are a B2B player and a tech enabler. We are looking for system integration partners, fintech partners across the continent to help grow this ecosystem, grow financial services. We really have the opportunity in Africa to be the poster child for fintech across the world. Am really excited to be part of this” he emphasizes.

Awards and recognitions

Ukheshe is proud of how far they have come with the platform, after being honoured with multiple awards in its home country of South Africa, Africa and globally, key of them being becoming part of the Mastercard Start Path Program partners.

Other achievements include being a finalist at Singapore FinTech Festival – the world’s largest fintech festival; South Africa Reserve Bank FinTech winner; and a Catapult Inclusion Africa cohort member, where they were selected from 245 companies.

The fintech also received an endorsement from The World Bank to accelerate its efforts towards financial inclusion. More importantly, its cashless payment revolution has moved a massive part of the South African informal sector into a cashless payment revolution.

It is this impact that Clayton and his team is seeking to replicate in the rest of Africa and globally.

This feature appeared in the June 2021 edition of Africa Inc. magazine. You can access the full digital magazine HERE

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