African and Latin Fintech: Innovate Stronger Not Harder!

Africa’s Fintech Industry is experienceing a global boom that appears to have no signs of slowing down. What we find very interesting is their philosophy of concentrating on “novel models” as opposed to legacy models that are not in tune with their demographic. Wired Magazine presented the obstacles and advantages of abiding by a more rapid model application to innovation for Africa Fintech models.

“Everything has to be built from scratch, and there is a high need for very simple tools,” says Sergio Almaguer, the CEO and cofounder of Yaydoo, a Mexico City-based B2B software and payments company. Building a solution to automate payments and invoicing between companies was predicated on the Mexican government’s implementation of an electronic invoicing system in 2004 called CFDi (Comprobante Fiscal Digital pro internet) for its federal tax code, following in the footsteps of Chile. By 2014, digitizing important payments to the government became mandatory. In contrast, many American businesses still use paper checks and PDF attachments in emails that have to be printed, hand-completed, and rescanned, only to be printed out again. American financial services company Intuit attempted to enter the Mexican market, but it is shutting up shop at the end of this year. The US Federal Reserve and the Business Payments Coalition just announced an e-invoice exchange market pilot in May 2022.

“When you have something that is, let’s say bad, but not extremely bad, you lose this urge or this need to innovate,” adds Almaguer. He described this phenomenon where in developed markets, things already “kind of work”—innovation would just be two or three steps forward on top of an established system or service. But startups in emerging markets have to start from scratch or create new infrastructure. Almaguer explains that startups also then have to either contend with or seek support through legal changes by governments eager to modernize. “In the end, the innovators will react to those changes. Without even realizing, what they create is a place better than maybe anywhere else in the world.”
Sergio Almaguer, the CEO and cofounder of Yaydoo