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Daily briefing - 09 September 2019

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Can one go from unbanked to neobanked rather than brick-and-mortar banked? Not only is the answer yes, but the unbanked are more likely to go straight to digital banking. "Poor existing banking infrastructure? No major Unicorns from the local ecosystem? - No problem," notes Arunkumar Krishnakumar at Daily Fintech. "The rise of Vietnam as an innovation/Fintech hotbed is a fascinating trend. A tech savvy population, supportive government regulations, and high smartphone penetration - a great combo that has done wonders to several countries across the world." As a result, Vietnam is attracting the third biggest investment flows in South East Asia. Lafferty News takes issue however with the concept of tech-savvy populations. Smartphones, for instance, are so addictive and intuitive that chimpanzees can use them. Seeing a street or a bus full of people tapping their phones does not a tech-savvy population make. When a country has plenty of coders and developers, then we can talk tech-savvy.

In the latest article on Kioneki.com, Michael Kimani is in conversation with Andile Masuku, co-founder and executive producer at Africa Tech RoundUp, discussing the rise of digital platforms and virtual currencies in Africa - and looking at who will ultimately control them. MNOs including Safaricom and MTN are among the most successful of African companies: Michael Kimani asks if they are in severe danger of losing out to the new digital platform players, largely controlled by giant US and Chinese businesses. "Yes they have," says Andile Masaku, "and I feel sorry for them. "MNOs were the original digital platforms in Africa, where people connected with friends, family or business contacts through calls and SMSs. But, with increasing smartphone and internet penetration, they have ceded this crucial business to internet companies. Facebook, WhatsApp, Telegram and Skype now have the upper hand because they facilitate better communication experiences at an ultra-low-cost with enhanced features like photo sharing, group chats, games, content streaming . . . the list is endless. WhatsApp for example, is the most popular messaging app in Africa. Young people in Kenya and Zambia now prefer to make calls and send voice and text messages via whatsapp. They are spending at least 5 hours per day on these platforms."

Goldman Sachs is doubling down on Mexico, with an investment of $100 million into fintech Konfio which provides unsecured lending to the small and medium business sector. "Konfio uses its technology to analyze credit behavior and collect other types of data, enabling it to respond to companies immediately and make disbursements in as little as 24 hours," writes Bloomberg. "Traditional loans to small and midsize companies sometimes take months before they're approved, and require collateral or guarantees. Konfio's interest rates are half those charged by the traditional banking industry, according to Arana." It's almost as if Goldman Sachs sees major corporates in long-term trouble. And if anyone could see that, it's Goldman Sachs, the masters of financial engineering. As we've been pointing out for years, the major driver in the rise of equities is share buybacks, which were illegal until the 1980s when the geniuses of deregulation overturned conventional regulations that had helped to hold a post-war consensus.

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