“It’s easy to get carried away about fintech … [but] there are still a huge number of customers and MFIs doing paper-based operations.” Over a decade ago, Musoni set out to revolutionise how financial services are delivered and improve the lives of unbanked people. They have now grown from a Kenyan microfinance institution (MFI) to a pioneering technology force in the MFI space, supporting organisations around the world with teams based in Kenya, Myanmar, Ukraine, and the Netherlands.

The potential of the digital transition

During a recent Goodwell Round Table, Musoni CEO Sander van der Heyden shared how his company’s approach to digitalisation helps expand the impact of MFIs. Starting at Musoni 13 years ago as a consultant, Sander has grown with the company, moving up to CTO, and now CEO. As his personal career developed, so too has the field of financial technology. Fintech is booming, but – particularly in developing countries – much microfinance business is still conducted on paper. Even large institutions face the same digitalisation issues as they did 10 years ago.

But, as we often hear these days, the COVID-19 pandemic accelerated the digital transition. Sander commented that digitalisation is no longer “just a tool” to increase efficiency: it became a lifeline for survival. Digitalisation is now expanding possibilities for millions of people in real, practical ways – particularly for those who face challenges accessing banking and financial services. “Digitalising field operations allows [MFIs] to go much more rural, much more quickly, where they previously would never have thought to open a branch,” Sander explained. If someone can’t meet a loan officer face-to-face, for example, they can now manage everything remotely on their phone. The impact potential is astounding: the market size for cloud core banking systems in sub-Saharan Africa will reach 1.9 billion by 2025.

Increasing efficiency to enable impact

Musoni “gives you the tools to help you digitalise”, building core banking solutions to help microfinance and financial institutions run their operations and enabling 100%-mobile microfinancing. Musoni currently has 72 clients in 26 countries, mostly within Africa. Most of their customers are MFIs, but they also support NGOs, SACCOs, asset finance companies and rural banks, and have recently started working with the well-known “buy-now-pay-later” organisation, Lipa Later.

Musoni’s impact is clearly illustrated by their clients’ feedback: Sander reported that loan officers using Musoni’s app enjoyed increased efficiency and reduced turnaround times. The surveyed officers “were so happy … because the process was so much simpler and faster for them – and they could just go home at the end of the day instead of having to go back to a branch [office] and key in all the forms. Overtime went down a lot and loan officers were much happier with their work/life balance.”

Of course, enabling easier processes and quicker financial transactions doesn’t just make a small group of workers happier at their jobs. Vitally, digitalisation allows more money to flow in and out of local communities and economies, driving growth and supporting entrepreneurship.

Looking ahead at fintech

Worldwide, people and organisations were initially cautious about digitalisation – especially from a security perspective. However, confidence levels are rising as everyone sees the proof that digitalisation improves efficiency, reliability, and customer service. And as a result, the fintech space is moving fast.

Commenting on some emerging trends, Sander observed that “composable banking” is on the rise. This is an increasingly popular approach to the variety of banking technology and APIs available, combining their interoperability to create a sort of “a la carte menu” of financial services specific to a customer’s needs – something that Musoni is already delivering.

Of course, the growth of fintech is resulting in more regulatory oversight of financial institutions in developing countries. “Regulators are professionalising – in a good way,” Sander noted. “They’re more understanding of cloud computing … requiring MFIs and financial institutions to be professionally run and to have good plans around their IT and operations. We, as a vendor, are asked more by auditors and stakeholders to help them and guide them” through this changing landscape.

Finding a partner in Goodwell

So how did Musoni and Goodwell connect in such a dynamic sector? It started with a shared commitment to serving underserved people and creating meaningful impact. Goodwell knows that expanding access to financial services directly contributes to positive impact across many sectors, while Musoni wants to assist MFIs and small businesses to make big improvements without making big investments. Add to that their expert team, motivated leadership, and a scalable business model, and it was clear that Musoni and Goodwell were a good match. Beyond strategic investments, Goodwell has been able to open doors to new territories and markets for Musoni, providing valuable access to global networks and support in growing and maturing their company.

The power of a shared goal to make positive change is clear, and further evidenced by Musoni’s success and future plans. As the company prepares to expand their reach into francophone Africa, as well as Asia and Latin America, Sander says Musoni still see themselves as a social business. Growing while remaining focused on supporting MFIs as an impact-driven, local player is an exciting ambition: “We are still very much in the microfinance and impact space. That’s the business we are now, and the business we’re building.”

If you’d like to learn more about how Goodwell supports impact-driven companies like Musoni or meet other Goodwell-funded entrepreneurs at a future Round Table, get in touch at contact@goodwell.nl.