Abdulhamid Hassan's departure from Paystack in 2020 to establish Mono marked a deliberate move to address a significant void in Africa's financial infrastructure. Mono's core objective extended beyond merely facilitating payments; it aimed to democratize access to financial data, thereby fostering a new era of fintech innovation across the continent.
Fast forward five years, Mono has become a formidable player, processing over 150 billion transactions, serving more than 7 million users, and expanding its footprint into Kenya and Ghana. Yet, for Hassan, the true measure of success isn't just about scale; it's about building a sustainable and impactful enterprise. In a recent interview with Nairametrics, the Mono CEO delved into the vast potential of open banking in Africa, sharing his expectations as the Central Bank of Nigeria (CBN) prepares for its official launch in August.
Unlocking Financial Data: The Openness of Nigerian Banks
Mono has been at the forefront of powering open banking in Nigeria, even before its official regulatory launch by the CBN. A key question arises: just how open have Nigerian banks been to data sharing? Hassan points to the example of Plaid in the US, a major open banking provider and one of Mono's investors, as a model. He emphasizes that Mono operates on a consent-based data sharing model. This means customers must explicitly authorize the sharing of their financial data, for instance, to obtain a loan. This customer-centric approach has, according to Hassan, fostered a positive and receptive environment with Nigerian banks.
"Mono is a consent-based data sharing platform," Hassan explains. "So, the customer must give consent that says, 'Okay, I want to give Renmoney my bank statement, so I can get a loan from them.' And I think because of that, the banks have been very helpful. They’ve been very open to that." He anticipates that the upcoming open banking regulations will further solidify these relationships, paving the way for revenue-sharing models where both banks and data providers can benefit financially.
CBN's Open Banking Launch: A Threefold Expectation
With the CBN's planned launch of open banking in August, Hassan outlines a threefold set of expectations for Mono and the broader ecosystem:
Firstly, he anticipates that the regulatory framework will encourage greater openness among more banks, making it easier for customers to share their data. Interestingly, Hassan notes that banks have often been more forward-thinking in their embrace of open banking principles compared to some fintechs in Nigeria. The CBN's approval, he believes, will make it mandatory for all financial institutions to open up their systems, a development he finds particularly exciting.
Secondly, the new regulations are expected to introduce stricter guidelines on data access and provision. The Nigerian Inter-Bank Settlement System (NIBSS) will maintain a registry of licensed institutions, ensuring that only regulated entities can provide and access customer data. This move is crucial for enhancing security and preventing unauthorized access to sensitive financial information.
Finally, Hassan is eager to see a more interconnected ecosystem. He envisions a future where financial data flows seamlessly and securely between various institutions, fostering innovation and creating new opportunities for consumers and businesses alike.
The Dynamics of Data Sharing: Why Some Fintechs Lag
The observation that some fintechs are less open to data sharing than banks might seem counterintuitive. Hassan identifies a few reasons for this disparity. One major factor is the fear of leveling the playing field. Some fintechs might worry that sharing customer data would reveal proprietary information, such as customer numbers or transaction volumes, to competitors. However, Hassan argues that open banking offers a reciprocal benefit: if you share your data, you also gain access to data from other financial institutions, ultimately creating a more equitable environment.
Another concern for fintechs has been security. The fear of data breaches or misuse has historically made some reluctant to embrace open data models. However, Hassan believes that the new CBN regulations and guidelines will alleviate these fears by providing a clear and secure framework for data sharing.
Lastly, financial institutions, including fintechs, are driven by financial incentives. Historically, without a clear revenue model, there was less motivation to invest resources in open banking initiatives. With the new regulations, Hassan anticipates that revenue-sharing agreements between data providers and banks will become more common, making open banking a financially viable and attractive proposition.
Beyond Open Banking: Mono's Strategic Evolution
Recent discussions have hinted at Mono potentially pivoting away from its core open banking focus, particularly with the launch of its Owo API. Hassan clarifies that this is not a pivot but rather a strategic evolution – "the next phase of our plan." He draws a parallel with Paystack, which, after initially focusing on card payment APIs, expanded into consumer-facing applications without abandoning its core business.
Mono's journey began as an API-centric company. However, recognizing the vast potential of its built APIs, they've begun to leverage them to create new, seamless payment experiences for consumers. A prime example is the Owo API, which aims to integrate financial transactions directly within messaging applications like WhatsApp. Hassan envisions a scenario where users can link their bank accounts to WhatsApp and make direct payments without leaving the app, eliminating the current cumbersome process of switching between applications.
"What we are saying is that look, there’s this new API that we have, which is powered by NIBSS Direct Debit, that allows us to be able to connect to your bank account and be able to debit it, such that you can link your bank account on WhatsApp. And then you can use your account to send money to people directly from WhatsApp," Hassan explains. This approach serves a dual purpose: it enhances consumer convenience and also acts as a powerful demonstration of Mono's API capabilities, potentially driving new business to their platform.
Navigating the Market: More Than Just Funding
The fintech landscape in Africa has seen its share of successes and shutdowns. The notion that Mono survived where others like Okra faltered due to stronger financial backing is a misconception Hassan quickly dispels. He reveals that both Mono and Okra have raised the same amount of funding – $16 million. He points to Stitch, a South African competitor that raised significantly more but ultimately exited the Nigerian market.
Hassan attributes Mono's resilience to a combination of factors: a broader product offering, a larger API suite, and successful expansion into multiple countries. Drawing lessons from his time at Paystack, he emphasizes the importance of staying closely attuned to customer needs and building solutions that directly address them.
He holds a strong conviction that the open banking market will ultimately surpass the card payments market in size and impact. This belief stems from open banking's multifaceted nature, encompassing data, bank payments, and identity verification – all critical elements for secure, fast, and efficient online transactions. "Open banking is going to be the biggest opportunity in Africa because of how it involves multiple things such as data, bank payment, and identity," he asserts.
The Indispensable Role of Perseverance
Securing funding, while important, is merely a small piece of the puzzle in building a successful company, especially in a challenging market. Hassan firmly believes that perseverance and an unwavering passion for the product are paramount. "Funding is just a minuscule part of it. The most important part is the founder, because building a company is very hard, it’s extremely hard," he states. The ability to push through immense difficulties and remain excited about the product is what ultimately differentiates enduring companies from those that falter.
The African operating environment, often characterized by its complexities, is not seen by Hassan as a deterrent but rather as a crucible that forges resilient companies. He argues that businesses capable of thriving in Africa are well-equipped to succeed anywhere in the world. He also cautions against reckless expansion or hiring sprees during market downturns, emphasizing the importance of listening to market signals and adapting accordingly.
"I personally believe that when the market is tough, that’s when you actually see the companies that will survive, not when the market is thriving," Hassan reflects.
Market Dynamics: Nigeria Leads the Way
Mono's operations extend beyond Nigeria to Kenya and Ghana. When comparing these markets, Hassan unequivocally states that Nigeria remains the biggest and most promising market for financial services. This is largely due to its substantial population and the conducive environment for fintech innovation. He notes that establishing a fintech company in Nigeria is often easier than in Ghana or Kenya, highlighting Nigeria's openness to market.
Hassan holds a high regard for Nigerian banks, considering them among the best financial institutions globally. This conviction underpins Mono's strategy of not holding customer funds or operating a wallet system, instead relying on banks as the secure custodians of money. Mono's role, he clarifies, is to facilitate the use of existing bank accounts within new interfaces like messaging applications.
The expansion into Kenya and Ghana was not driven by an arbitrary desire for growth but by the specific needs of existing Nigerian customers launching in those markets. This demand-driven expansion strategy ensures that Mono's international ventures are rooted in genuine business opportunities rather than mere ambition.
The Path to Profitability and Future Horizons
After five years, Mono is steadily progressing towards profitability. Hassan proudly shares that the company reached a significant milestone last month: its revenue now covers all payroll expenses. While not yet fully profitable, this achievement signifies a crucial step towards self-sustainability, mitigating the reliance on external funding for operational costs.
With a team of approximately 40 individuals spread across various locations, including India and the UK, Mono operates with a remote-first approach, complemented by an office for weekly in-person collaboration. The business is on a strong growth trajectory, particularly with the impending open banking regulation in Nigeria. Hassan sees this regulation as a catalyst that will unlock even greater opportunities, extending beyond financial institutions to encompass non-financial data such, as insurance and mortgage information.
The journey of Mono, from a bold idea to a significant player in Africa's fintech landscape, underscores the power of foresight, perseverance, and a deep understanding of market dynamics. As open banking gains momentum, Mono is poised to play a pivotal role in shaping the future of financial services across the continent.