Tim Nuy On Financial Inclusion As A Key Mechanism For Driving Widespread Social Change

Timothy Nuy is the Founder and CEO of Finclusion Group, working to enhance the lives of Africans through simple, convenient, and appropriate 2022-era financial services.

Since its inception in 2018, Finclusion’s proven credit scoring modules have led to the distribution of 310 million in loans to 240,000 customers across five countries.

Prior to creating Finclusion, Nuy founded Fractal Labs in January 2020, creating a unique risk and AI modelling framework brokered to the financial market. He previously served as the Deputy-Chief Executive Officer of MyBucks, a company that operated financial institutions in Africa, Europe, and Australia. In March of 2019, he moved into the role of Chief Executive Officer, paving the way for the founding of his current companies.

Tim received his Bachelor of Science in International Business Economics from Maastricht University in 2008, also completing a program at Cal Berkeley’s Haas School of Business.

Tim discusses How financial inclusion is enhacing the lives of africans, and What roles technology, machine learning, and AI play in helping people access critical financial support.

Highlights from the interview (listen to the podcast for full details)

[Indio Myles] - To start off, as CEO and founder of Finclusion, can you please share more about this organisation?

[Tim Nuy] - After my studies, I started working in financial restructuring as a consultant. I did that for a period of time, and then I coincidentally joined a German group investing in African financial services, called the ADC, African Development Corporation. At ADC, we bought banks, payment services and insurance companies across the continent. We built that group out from 2011 to 2014 and sold it to Bob Diamonds at Atlas Mara. I saw that the true opportunity existing is still in the emerging retail credit gap. There is a massive amount of underserved individuals and businesses that can’t access credit efficiently.

I joined a microfinance group in 2015, helped them scale across 12 countries, built a loan book of over 200 million dollars, and then we listed at the Frankfurt Stock Exchange. Unfortunately, I had a bit of a strategic difference of opinion in 2018 with the founders, so I ended up leaving. That's when I started Finclusion. The thesis of Finclusion is still very much behind closing that credit gap, efficiently servicing individuals using technology and really providing usable financial services that people can actually access credit and deploy into businesses. But, these loans are also sizable enough and for meaningful things, not just to go and have a drink or put a bit of money on sports betting. That's my personal background, and now I go deeper and deeper into working on the African continent. For me, from continuing to work on the continent, the biggest benefit is that it's nice to do something both impactful and financially meaningful.

Can you please share the key lessons you’ve learnt on your journey of creating this company?

Finclusion today is an emerging credit-led neobank. Today we do lending in 5 markets. We're in South Africa, Eswatini, Namibia, Kenya, and Tanzania. We're looking to expand our product offering over time from just credit into savings, cards, transactional services. We will be servicing the full range of financial services. With Finclusion being a credit-led neobank, our IP includes the credit scoring technology we've built, algorithms we've created and how we assess data and credit worthiness.

WE'VE MADE SURE WE'VE BUILT TECHNOLOGY IN A WAY where WE CAN TURN AROUND LOANS QUICKER THAN ANYBODY ELSE. We ENSURE ARE A RELIABLE BUSINESS PARTNER FOR INDIVIDUALS AND BUSINESSES ACROSS THE CONTINENT, PROVIDING THEM ACCESS TO CREDIT WHEN THEY NEED IT.

Obviously on the journey there have been interesting times, particularly in 2020-2021 having the COVID pandemic in addition to other things. For us, we´ve learnt at the end of the day, if you really focus on basic financial services and creating a product fit with your client’s needs, you can create something amazing and change people's lives. A positive reflection is we see the good the loans do. We are able to fund people's medical procedures in cases of emergencies, help them start businesses, put their kids through school and ensure we're always there when people need it from a cash flow perspective.

Working with clients where possible is even more important at this time than it used to be, because a lot of people are still recovering from the pandemic. The biggest challenge, and it's not so much a lesson but we're still learning it, is always, even as a financial institution balancing growth. When do you push the growth button and when do you focus on preserving liquidity to be able to trade through different times? Because everything always takes longer, if you expect an investment to close in August, it might only close in December. Initially, I always thought you could overcome this if you planned with everyone at the same time, but I guess different people have different timetables.

What are the most significant obstacles preventing people from accessing financial support throughout the African Continent?

Today the big banks don't really want to serve individual customers. Considering that they offer small loans, it's not worth it on an absolute level. Technology and their financial infrastructure are problematic, and the banks struggle to vet ID. The digital rails are still a big challenge. If you look at what happened in India, where you can basically verify people's IDs completely digitally, that's miles ahead from what's currently available on the African continent.

I think those two factors together are probably the most significant obstacles. The African continent is 54 countries rather than one country, which means that they're really a lot of fragmented individuals, smaller markets that you have to provide for in slightly different and tailored ways because although some markets are similar, they all have their own licensing requirements and their own particularity. And I think that's really something that makes it very hard to also provide access on the continent to many people in an easy to access way.

How does financial accessibility and security create broader flow-on social impacts?

FINANCIAL INCLUSION ALLOWS PEOPLE TO FUND EDUCATION AND ALLOWS PEOPLE TO START A BUSINESS. IT REALLY ALLOWS THEM TO DRIVE GROWTH, PRODUCTIVITY AND their FUTURE.

That's incredibly important, because education is the baseline for improvement in future lives. The ability to access funds really allows them to be independent in creating a business and/or furthering their children's education. That's the baseline for further social impact, because it's sustainable. It's not about giving people a handout, but you give them the tools to really change their lives themselves.

Where do you see opportunities for financial literacy and inclusion to be enhanced by innovative technology?

The opportunities are endless, but most importantly, it's really enhancing the interaction between all the different components.

WE´VE CREATED A FINANCIAL SERVICE APP THAT PROVIDES LENDING AND BANK ACCOUNTS, BUT IS GAMIFIED TO ALSO DRIVE TEACHING AND ENHANCE LITERACY. PEOPLE UNDERSTAND WHAT THEY'RE DOING.

Suddenly, with smartphone market penetration going up, data prices are coming down. There's a lot of things you can do digitally that previously weren't viable. A basic smartphone is currently of such a pricing you could almost give it for free with a loan. That's where the real opportunity is coming from. That is from a price point perspective, we're coming to a point where you can really afford to use financial services and smartphones to empower people flexibly.

What inspiring projects or initiatives have you come across recently which are creating a positive social change?

There's one on a smaller scale and one on a bigger scale. For me obviously, looking within the scope of what we do from a financial services space, what we've started seeing more and more is capital flying from the globe into Africa. African Fintech capital is still up, whereas the rest of the world is down. A lot of the projects that are being started are actually driving social change. They provide financial inclusion, food security and trading.

That by itself is incredibly powerful to see. More specifically, we are seeing start-ups popping up in the agriculture space. FMO and Endeavor also started a start-up accelerator to help businesses in that agriculture space. I think this is extremely exciting, because education in agriculture is incredibly important so people know what crops to plant and how to make the best use of the tools they have. That for me is probably a very important program, and I think that start-up plan, which started with FMO and Endeavor, is very helpful because it provides easy access for farmers to grow and scale. There's a couple of other initiatives and start-ups driving employment and formalising smallholder farmers. Those things are creating incredibly positive change, because they directly impact people through employment and financial benefits.

To finish off, what books or resources would you recommend to our listeners?

We try to read from time to time whatever we can. A couple of different resources that helped us in a big way is the book Zero to One by Peter Thiel, it was extremely interesting and had a lot of thought provoking messages. More locally, I think the founder of Zoona, Mike Quinn wrote a book called Failing to Win. It was very interesting, because there's a lot of things that ring home for people creating a start-up themselves.