Banks for You, Banks for Your Business, Fintechs

Fintech Outsourcing Philippines: How Technology is Leveling the Playing Field for Challenger Banks

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    In the rapidly evolving world of financial technology, challenger banks are revolutionizing the way we think about banking. These digital-only institutions, unburdened by the legacy systems of traditional banks, offer streamlined, customer-centric services that appeal to a tech-savvy audience. However, behind their sleek apps and user-friendly interfaces lies a complex web of technological innovation and operational efficiency, much of which is increasingly being outsourced to the Philippines. This Southeast Asian nation has become a crucial partner in leveling the playing field for neobanks, offering a unique blend of cost efficiency, skilled talent, and technological prowess.

     

    Digital innovators and disruptors have emerged as formidable competitors to traditional banks by providing transparency, lower fees, and unparalleled convenience. Operating primarily online, they cater to customers who prefer digital solutions and demand seamless experiences. Yet, despite their advantages, these banks face significant challenges, from navigating regulatory landscapes to fending off cybersecurity threats and maintaining a relentless pace of innovation. Here, the strategic move to outsource customer service and back-office operations to the Philippines has proven transformative.

     

    The decision to migrate business processes to the Philippines is driven by several compelling factors. Foremost among these is cost efficiency. Labor costs are markedly lower than in Western countries, enabling challenger banks to allocate their resources more effectively. This cost advantage is not just about saving money; it’s about redirecting funds to critical areas such as technological development, marketing, and customer acquisition, which are essential for sustaining growth and competitiveness in the fintech space.

     

    The Philippines is also home to a highly skilled workforce, particularly in the fields of information technology and fintech. Filipinos bring technical expertise, adaptability, and a strong work ethic to the table, making them invaluable assets for fintech companies. Their proficiency in English and cultural affinity with Western nations further smooth the integration process, allowing for seamless collaboration and communication.

     

    Technological expertise is another significant draw for fintechs. The country has made notable advancements in various technologies, including software development, data analytics, artificial intelligence, machine learning, and blockchain. These cutting-edge technologies are critical for enhancing product offerings, improving customer experiences, and staying ahead in a fiercely competitive market. By outsourcing to the Philippines, digital banks gain access to these advanced capabilities without the burden of developing them in-house.

     

    Navigating the regulatory landscape is a daunting task for any financial institution, and challenger banks are no exception. Many Philippine contact centers have extensive experience dealing with international regulatory requirements, providing essential support in compliance, risk management, and legal standards adherence. This expertise is invaluable in ensuring that operations run smoothly and within the bounds of global financial regulations.

     

    Cybersecurity is another area in which the Southeast Asian archipelago excels. With financial institutions being prime targets for cyber-attacks, robust security measures are non-negotiable. The Philippines has developed a strong cybersecurity framework, with many firms specializing in protecting sensitive financial data. By leveraging this expertise, neobanks can bolster their security protocols, safeguarding customer information and maintaining trust.

     

    Customer experience is a key differentiator for fintech enterprises, and outsourcing enhances this aspect significantly. Filipino agents are renowned for their excellent communication skills and customer-centric approach, making them ideal for front-office roles. Providing 24/7 customer support ensures that inquiries and issues are addressed promptly, enhancing customer satisfaction and loyalty.

     

    Looking ahead, the prospects for fintech outsourcing to the Philippines are bright. The country is continually developing its infrastructure, and the government’s commitment to fostering the outsourcing industry ensures that it remains a top destination for fintech operations. As technology advances, the Asian BPO powerhouse nation is well-positioned to support the growth of neobanks and other fintech enterprises.

     

    In the grand narrative of fintech innovation and disruption, the Philippines has emerged as an unsung hero. By offering a unique combination of cost advantages, skilled talent, and technological expertise, it is helping challenger banks overcome operational challenges and compete with traditional financial institutions. As the fintech landscape continues to evolve, the strategic partnership between challenger banks and the country is set to drive unprecedented levels success, reshaping the future of banking as we know it.

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    Lesaka completes the acquisition of Adumo, cementing its position as the leading independent fintech in Southern Africa

    2024-10-02T12:05:00Z

    JOHANNESBURG, Oct. 02, 2024 (GLOBE NEWSWIRE) -- Lesaka Technologies, Inc. (“Lesaka” or the “Company”) (Nasdaq: LSAK; JSE: LSK) today announced it has completed its acquisition of Adumo RF (Pty) Ltd (“Adumo”). The transaction was settled through the issuance of 17,279,803 shares of Lesaka’s common stock and a cash payment ZAR 232.2 million ($13.4 million), implying a total purchase consideration of ZAR 1.67 billion ($96.2 million) using Lesaka’s October 1, 2024, closing price on the Johannesburg Stock Exchange of ZAR 83.05 per share. All amounts in this release have been translated to U.S. dollars at the October 1, 2024, closing exchange rate of $1: ZAR 17.34.

    The acquisition of Adumo, South Africa’s largest independent payments processor with over 20 years’ experience in payment solutions, reinforces Lesaka’s position as natural consolidator of Southern African fintech. The acquisition enhances the Company’s strengths in both its consumer and merchant markets and follows the successful integration of the Connect and Kazang businesses and the recent acquisition of Touchsides.

    Lesaka CEO Southern Africa Lincoln Mali said: “The Adumo transaction is an exciting addition to the Lesaka story. It significantly enhances our technology platform, adding customers, solutions, and meaningful scale. Lesaka’s full-service fintech platform will serve 1.7 million active consumers, 120,000 merchants, and process over ZAR 270 billion in throughput (ZAR 45 billion card, ZAR 105 billion VAS and ZAR 120 billion cash) per year in our connected ecosystem as we facilitate the digitization of commerce in our markets. The Group will have over 3,300 employees operating on the ground in 5 countries: South Africa, Namibia, Botswana, Zambia, and Kenya.

    “I would like to extend a warm welcome to all the Adumo employees, as well as Adumo Chief Executive Paul Kent who joins our executive leadership team. Paul will take responsibility for our merchant pillar. I would also like to welcome Crossfin Chief Executive Dean Sparrow who joins our board as a non-executive director and our new shareholders – Apis Growth Fund I and African Rainbow Capital, the largest shareholder of Crossfin.”

    Adumo CEO Paul Kent said: “We are thrilled to be joining the Lesaka group, creating a Southern African fintech of significant scale, with leading positions in several verticals and sectors. Our businesses are a natural fit with the combined solution set, distribution network and technologies positioning us perfectly to take advantage of the digitization across our economy. We continue to innovate and expand the holistic suite of products and services offered to our merchants in solving for their pain points.”

    Steve Heilbron, Head of Corporate Development at Lesaka added: “This is an exciting day for us and for the customers that we serve. Bringing the Adumo business into the fold is a landmark transaction for Lesaka. The acquisition materially broadens our product offering to our customers and deepens our penetration in both the merchant and consumer segments. This will accelerate our growth profile. The combined scale and solutions of our fintech platform significantly enhances our ability to innovate and disrupt as well as providing a beachhead into new markets opportunities. There is a strong alignment of culture and values between Lesaka and Adumo, and we look forward to integrating our teams. I would also like to take this opportunity to welcome Paul Kent to Lesaka. We are very excited to have Paul and his team on board.”

    Purchase of shares from indirect Adumo shareholders

    In fulfilment of one of the conditions of the transaction, Lesaka has agreed to purchase 2,601,410 shares of its common stock, through a wholly owned subsidiary, for ZAR 207.2 million ($12.0 million), or ZAR 79.66 per shares, to provide cash liquidity to a group of indirect Adumo shareholders who were unable to receive Lesaka shares under their investment mandates. The purchase is expected to complete in early October 2024.

    About Adumo

    Adumo is South Africa’s largest independent payments processor with over 20 years of experience, delivering integrated payment solutions that simplify transactions for businesses of all sizes. Adumo serves approximately 23,000 active merchants with operations across South Africa, Namibia, Botswana and Kenya. For more than two decades, Adumo has facilitated physical and online commerce between retail merchants and end-consumers by offering a unique combination of payment processing and integrated software solutions, which currently include embedded payments, integrated payments, reconciliation services, merchant lending, customer engagement tools, card issuing program management and data analytics.

    Adumo operates across three businesses, which provide payment processing and integrated software solutions to different end markets:

    • The Adumo Payments business offers payment processing, integrated payments and reconciliation solutions to small and medium (“SME”) merchants in South Africa, Namibia and Botswana, and also provides card issuing program management to corporate clients such as Anglo American and Coca-Cola;
    • The Adumo ISV business, also known as GAAP, has operations in South Africa, Botswana and Kenya, and clients in a further 21 countries, and is the leading provider of integrated point-of-sales software and hardware to the hospitality industry in Southern Africa, serving clients such as KFC, McDonald’s, Pizza Hut, Nando’s and Krispy Kreme; and,
    • The Adumo Ventures business offers online commerce solutions (Adumo Online), cloud-based, multi-channel point-of-sales solutions (Humble) and an aggregated payment and credit platform for in-store and online commerce (SwitchPay) to SME merchants and corporate clients in South Africa and Namibia.

    Adumo generates the majority of its revenue from per transaction fees that are calculated as a percentage of transaction value, and software-as-a-service (“SaaS”) subscription fees charged to merchants. As of June 30, 2024, Adumo employed approximately 950 employees throughout Southern Africa.

    About Lesaka (www.lesakatech.com)

    Lesaka Technologies, (Lesaka™) is a South African Fintech company driven by a purpose to provide financial services and software to Southern Africa’s underserviced consumers (B2C) and merchants (B2B), improving people’s lives and increasing financial inclusion in the markets in which we operate. We offer a wide range of solutions including transactional accounts (banking), lending, insurance, cash management solutions, card acceptance, supplier payments, software services and bill payments. By providing a full-service fintech platform in our connected ecosystem, we facilitate the digitization of commerce in our markets.

    Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE: LSK). Visit www.lesakatech.com for additional information about Lesaka Technologies (Lesaka ™).

    Forward-Looking Statements

    This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “plans,” “could,” “would,” “may,” “will,” “intends,” “outlook,” “focus,” “seek,” “potential,” “mission,” “continue,” “goal,” “target,” “objective,” derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In this press release, statements relating to future financial results and future financing and business opportunities are forward-looking statements. Additional information concerning factors that could cause actual events or results to differ materially from those in any forward-looking statement is contained in our Form 10-K for the fiscal year ended June 30, 2024, as filed with the SEC, as well as other documents we have filed or will file with the SEC. We assume no obligation to update the information in this press release, to revise any forward-looking statements or to update the reasons actual results could differ materially from those anticipated in forward-looking statements.

    Investor Relations Contact:
    Phillipe Welthagen
    Email: [email protected]
    Mobile: +27 84 512 5393

    Media Relations Contact:
    Ian Harrison
    Email: [email protected]


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