Blockchain is here to stay, and startups will be at the heart of the technology’s spread across Africa.
That is according to Tricia Martinez, chief executive officer (CEO) of South African fintech startup Wala, which is using its new Dala digital token to deliver zero-fee access to products offered by financial institutions.
Speaking at the Dot Finance Summit Africa in Kigali this week, Martinez said there was a lot of speculation that the digital currency bubble was going to burst, but that is not the case.
“Financial services companies are afraid of it. They don’t understand. It is the same thing that happened when fintechs were becoming more successful. They saw it as a potential cannibalisation of their business. The fact we can move money borderless without fees scares them,” she said.
However, key to the increased uptake of digital currencies is the development of platforms that allows for their more efficient use. Startups can play a key role in bridging the gap here.
“There is no way for consumers to engage with the cryptocurrency solutions as they stand today. We are trying to build that platform, to help consumers engage with the system,” Martinez said.
“In order for crypto to get into the hands of users we need companies that are going to build the user interfaces.”
Startups can also play a role in the growth of the space by assisting larger companies with their blockchain strategies.
“We began working in South Africa with big banks. But now we are working with smaller microfinance institutions. They don’t have the tech teams, and they are open to it, they are looking for insights from fintechs,” said Martinez.
“For smaller banks, if you don’t have the ability to bring in a big team, you need to work with a fintech.”
Lack of understanding of how the blockchain works need not be an inhibitor of its spread, especially given the potential it has in extending financial services to the underserved.
“Most people don’t have the knowledge of how blockchain works, but that’s OK. It is like when the internet came along, but now we use it and we trust it,” Martinez said.
The huge number of potential use cases for blockchain technology will also help.
“Any point in your life that requires trust can be replaced by blockchain. You remove the need for a middleman, and human beings,” said Martinez. “And that is scary for people but it is the way of the future. And it is a way of getting people more involved with financial services. If you can’t get a loan from a bank because of KYC, you can get it using the blockchain.”
Use cases will emerge that do not today appear obvious, she said.
“In 10 years from now we are going to look back and say: “We had no idea this was a use case for blockchain”,” said Martinez.
By 2020, Dubai wants all visa applications, bill payments and licence renewals to be transacted digitally using blockchain. Martinez believes other countries will follow this lead, especially smaller ones that are less developed at this point.
“Smaller countries are potentially embracing this tech. They don’t have much bureaucracy in place,” she said.