NEOBANKS: BLOCKCHAIN Antti Arponen saw an opportunity in the space between m-money providers and the banks in a region where opportunity is boundless, but access to finance limited. With blockchain-driven Pyypl, he hopes to plug the gap Having previously worked at Virgin Mobile for 13 years as country CEO, group COO and group chief digital officer for the Middle East and North Africa (MENA), Antti Arponen was well aware of how a lack of infrastructure can seriously hold back poorer communities. “At Virgin, we believed that everybody should have a mobile phone with an internet connection,” he says. “Our whole reason for launching in the MENA region was that we saw how incumbent telecom providers gave preferential treatment to high-income population segments, and so weren’t bothered about working to offer quality service at a reasonable cost to the masses.” It was while building this missing link for the telecoms sector that Arponen came up against a similar roadblock to universal access to financial services –
and it inspired him to found the financial technology company, Pyypl. Pronounced ‘people’, the blockchain-powered startup’s first focus was a virtual pre-paid card, which was available to everyone and, crucially in this part of the world, allowed them to spend anywhere – including online. “At Virgin, when we began tracking how our users paid their Virgin mobile phone bills, we realised that the few people who did have credit or debit cards were unable to use them to pay online. We couldn’t believe this,” recalls Arponen. “The process of obtaining a credit card in many of these regions is often a long one: you need to go to a branch, you need to fill in a pile of paper, you need to have a credit score, which you can’t have if you are not banked yet, etc. The fact that even
For the people, by the Pyypl www.fintechf.com
those who were successful in their application still didn’t have online financial freedom felt crazy. “It turned out that banks were in a position to offer the service, but their cost structure simply didn’t make it possible for them to extend those services to low- and mid-income markets. And non-bank alternatives were faced with the challenge that the regulatory approval to provide such options was a three- to four-year procedure, which needed to be done for every single country in the region separately.” Believing that online payments should be accessible to all, Arponen made the decision, then and there, to start the painstaking regulatory dialogue needed to build an online payment solution that could work not just across the MENA region but the whole of Africa, and Central Asia, too. It was a bold move, given the regulatory disparity between what are still mostly cash-based states. “People perceived us as masochists for welcoming the headache, but we didn’t see it as such,” says Arponen. “We love the regulators – they’re just trying to protect the consumer. And that’s 100 per cent aligned with what we wanted, as well. Regulators have a really difficult job, and we know that first-hand from our co-founder, Phil, who worked in senior positions for two of them.” Now five years into his journey, Arponen believes engaging in deep dialogue with regulators before the technology was even built, to really understood the landscape in the United Arab Emirates (UAE) and beyond, gave Pyypl a distinct first-mover advantage, especially over the many foreign startups now taking an interest in the region. “Innovation couldn’t have happened on a superficial level by building some nice-looking app or grafting an American or European fintech,” he says. “It needed to happen at a deeper, regulatory level because we were in new territory. Moreover, many of these regions are entirely based on cash, so foreign business models built on foundations which are invalid here, would fail.” Issue 8 | ThePaytechMagazine
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