Africa’s tech ecosystem just received a spotlight, with South Africa’s TymeBank and Nigeria’s Moniepoint both raising funds in recent weeks at valuations in excess of $1 billion and joining the coveted unicorn pantheon.
But these ratings don’t just reflect investor confidence. They signal the success they’ve had in taking disruptive fintech models originally developed for mature economies and adapting them to work in a region where nearly half the population remains unbanked.
The main goal of both companies has been to simplify banking for individuals and businesses in two of Africa’s largest economies.
TymeBank began by offering retail customers low-cost bank accounts and savings products before expanding into business banking, providing working capital to small businesses in South Africa.
Meanwhile, Moniepoint started in Nigeria supporting small businesses with accounts, payments, loans and spending tools and has recently expanded into retail banking.
Importantly, both fintechs are taking a hybrid approach to banking, blending the convenience of digital banking with real-world physical touchpoints.
“In Africa, it’s a catch 22: You can’t have one without the other,” Lexi Novitske, general partner at Norrsken22, an investor in TymeBank, told TechCrunch. “Many tech companies have to build customer acquisition and engagement through very analog or physical efforts.”
Highly informal markets require a mixed approach
Their strategy contrasts with challenger banks in the US and other developed markets. Revolut, Monzo and Chime work as their names suggest: digitally. Even some platforms in emerging markets, such as Nubank and JPMorgan’s C6 in Brazil or small businesses like Open in India, have focused on digital-only channels to build regional category leaders.
But a purely digital approach is not ideal in Africa. There are exceptions – such as Valar-backed fintech Kuda – but there is a limit to the number of customers such a platform can reach. So, as Stephen Deng, co-founder at DFS Lab, an early-stage investor focused on Africa, says, they will face (domestic) revenue ceilings.
Furthermore, it is a region where cash is king, internet connectivity can be unreliable and trust in purely online systems remains low. Cash remains the most dominant form of payment across Africa, accounting for over 90% of all transactions, according to a McKinsey report. Meanwhile, the GSMA says 43% of sub-Saharan Africa has internet access.
TymeBank and Moniepoint have created a middle ground that thrives on meeting retail and business customers where they are. TymeBank currently claims 15 million users across South Africa and the Philippines, while Moniepoint says over 10 million people and businesses use its services. (However, Kuda, valued at $500 million, is not far behind, with about 7 million users.)
“When venture capital was plentiful, you could pay people to adopt your digital-only product, but there’s not enough average revenue per user (ARPU) there to justify the costs in the long run,” Deng said. “Moniepoint, Tyme and others have realized that you need to build physical touchpoints that interface with the mass market while maintaining the ability to push your technology through those interfaces. We call this a “cyber” approach because it enhances informal—often in-person—channels with technology, without falling into the costly trap of trying to fully digitize those channels.
Adapted models for the maturity of banking markets
One of the key things TymeBank has done at scale is creating retail partnerships with supermarkets such as Pick n Pay and Boxer to expand its reach in South Africa. These retail touchpoints act as quasi-branches: TymeBank uses kiosks and ambassadors in these stores to assist new customers in opening accounts and depositing funds, adding a human element to its operations for those who prefer face-to-face interactions .
It’s a model that works because it recognizes and adapts to how the average African consumer interacts with financial services. Walking into a supermarket to buy groceries and leaving with a new bank account is natural for many people.
TymeBank has over 1,000 kiosks and 15,000 retail outlets across South Africa. Meanwhile, its sister company, GoTyme – a joint venture between parent company Tyme Group and local conglomerate Gokongwei Group, launched in 2022 – adopts the same strategy and has nearly 500 kiosks and 1,500 bank ambassadors in the Philippines.
In Nigeria, QED-backed Moniepoint has taken a slightly different approach, building an extensive network of agents across the country. About 200,000 of these agents are small business owners equipped with point-of-sale (POS) devices and act as human ATMs, enabling cash deposits, withdrawals and bill payments. The system mirrors the model that has fueled the success of mobile money in Africa, which Safaricom’s M-Pesa pioneered in Kenya.
Decentralizing its operations through agents, it bridges the gap between urban and rural populations by providing financial services in areas where traditional banking infrastructure, a bank or an ATM, is non-existent or unreliable (the World Bank estimates only 16.15 ATMs per 100,000 adults in Nigeria since 2022.)
Similarly, countries like Nigeria thrive on so-called “informal” trade—beyond the purview of tax collection and other authorities—that accounts for nearly 60% of its GDP. Combining this with the high number of unbanked consumers and businesses, a model that has physical elements is more of a necessity than an innovation.
Both companies now offer retail and business banking services and have used the hybrid model as a basis for adding other services, such as loans, working capital loans, business management tools, accounting and bookkeeping and insurance.
After their recent unicorn rounds, both will look to replicate their models beyond their home markets, where they claim to have achieved profitability. For Tyme Group, which recently announced a $250 million Series D round led by Nubank at a $1.5 billion valuation, an expansion into Vietnam and Indonesia is already underway. Like Africa, developing economies in Asia present a mix of digital adoption and offline dependence. If anything, GoTyme’s current growth trajectory makes the move a logical next step.
After raising $110 million, Moniepoint will look to deepen its operations in Nigeria and expand into other African markets, such as Kenya. It could also explore these markets through acquisitions, which would pave the way for more regional consolidation.
Outlook outside fintech
In all of this, perhaps the most compelling part of the hybrid model is what it holds up for African fintech, as TymeBank and Moniepoint are not the first fintechs to deploy the model on their way to unicorn status.
And it’s playing out on their scale. Africa’s first group of billion-dollar fintechs, including Interswitch and Flutterwave, provided infrastructure and payment solutions to local and global merchants across the continent. Subsequent fintech unicorns, including SoftBank-backed OPay, Stripe-backed Wave and Chimera Investments-backed MNT-Halan, all provide financial services to tens of millions of customers across Africa using a mix of digital and point-of-sale applications contact in the real world.
Fintech is arguably the most successful startup category at the moment, accounting for eight of the nine startups valued at over $1 billion in the region. As it continues to attract more interest from investors locally and globally, such a model can serve as a blueprint and best bet for achieving venture-type returns and, at the same time, fostering financial inclusion.
However, at the same time, there is significant potential to apply the hybrid model to industries beyond fintech, particularly in Africa’s informal markets. For example, telemedicine — an industry that relies heavily on trust — can use local, in-person touch points for patients on board while streamlining operations through digital platforms, according to Novitske. E-commerce and group insurance models are other industries she cites.
“We think the most successful startups in Africa will take a hybrid approach,” commented Deng. “The interface between digital and physical is often where innovation happens because the aggregation of informal markets requires physical touchpoints. In B2B markets, procurement is often informal. In cross-border payments, including with stable currencies, domestic payments are often informal. In local retail, payment and delivery are often informal.”
