Reaching the Top 50: Wave's Strategic Brilliance in the African Fintech Scene.
- Peter Johnson
- Jan 2, 2024
- 3 min read
Wave, a French-speaking fintech start-up, recently made its way into Y Combinator's top 50 businesses that brought in the most money in 2022, along with other firms such as Coinbase and Zapier.
Since its founding in 2005, Y Combinator's core mission has been to boost entrepreneurs and businesses by supplying seed funding, mentorship, and access to resources for startups. Several African firms that are currently widely recognized, such as Flutterwave, cowrywise, and Kobo360, have been aided by Y Combinator since its initiation.
Out of the 50 companies which featured on the list of highest-earning in 2022, 70,000 employees were employed by them, with 22% having offices in the US. Impressive achievements were achieved, with up to $40 billion in funding and around $50 billion in revenue. How is it feasible for Wave, a francophone fintech start-up, to attain such heights?
Wave differs from traditional mobile banking by providing an innovative approach to money transfer and payment services via a phone-based app.
These two men, Durbin Drew and Lincoln Quirk, founded this incredible enterprise in 2018 in Senegal. By way of a mixture of creative technology and low transaction expenses, within four years of business, it has become the first unicorn in the French-speaking African continent to exceed the $1 billion mark. Amazingly, more than half of the accounts opened are in Senegal.
They were the first fintech start-up in Francophone Africa to lower their transaction fee to 1%, which struck fear into the hearts of their competitors who were charging 6 - 10%. In response, they reduced their percentage to 1% in order to keep both their existing and potential customers from turning to Wave.
Wave created a system for bill payments that had no extra fees. This attracted a lot of customers as they were aware that there would be no hidden costs, driving up the company's profits.
The challenge of inclusive banking in Senegal has been an issue of great consequence. Most Senegalese citizens have either had limited opportunities to use traditional banking services or entirely lacked access to financial resources. This has been due to three predominant factors: the absence of physical banking branches in rural parts of the country, high fees attached to conventional banking services, and unfamiliarity with the formal financial system.
The advent of Wave was integral in remedying these issues and facilitating financial inclusion in Senegal.
By 2016, approximately 15.4 million people lived in Senegal, and more than half were living in poverty. This created a hardship when paying high fees for each transaction. Wave took action to resolve this issue and introduced a minimal fee for any online or offline transaction. Consequently, the problem of financial exclusion was addressed and an abundance of people in Senegal now possess a bank account because of Wave's change.
A large proportion of Senegalese citizens lack the necessary Identity card to open a bank account, constraining them from partaking in the country's banking system. Wave has solved this problem by introducing a service which allows for the opening of bank accounts via telephone.
Even without a smartphone, banking was still possible thanks to the creative Q.R card. This groundbreaking technology allows transactions to take place whenever the need arises. This is a one-of-a-kind invention that has not yet been attempted by any fintech startup.
Gueye, from Darker, noticed that her mother had previously relied on sending her grandchildren to conduct banking transactions since she was not literate. However, the introduction of Wave and the Q.R. card allows her to do so independently, as her account details are stored in the card.
Even without literacy skills, people can make effective use of this card, needing no help from anyone else. All that's necessary is a cell phone to serve as a means of authentication and verification.
Moreover, a physical site was set up so individuals could carry out deposits or withdrawals with a fee of 1%.
Essentially, Wave had a presence both in the physical and digital worlds. They were the first startup based in a French-speaking African country to accomplish this.
Having accomplished these feats, they have progressed to other French-speaking nations, such as Ivory Coast. Presently, they are in Mali, and I have no doubt that their reach will expand further across the globe.
Despite Flutterwave and Opay's preeminence in the African Fintech sector, Wave is still making an impact. What do you think? Is Wave on track to dominate the African Fintech field?
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