In spite of the obstacles and challenges imposed by the COVID-19 pandemic, Channel VAS managed to leverage this situation and seamlessly serve its customers. In an exclusive interview with Telecom Review, Bassim Haidar, chairman & CEO of Channel VAS Group spoke about the company’s scope of business and how the services it offers cater to customers’ needs.
First of all, can you give us an overview of Channel VAS, the main services you offer and your target customers’ profile?
Channel VAS is a global Fintech leader, providing a variety of services to mobile network operators and financial institutions. We provide cutting edge solutions in the fields of mobile financial services, airtime and data credit services, as well as handset loans and big data analytics capabilities. We currently have presence in 42 countries globally, with our focus being in emerging countries in Sub-Saharan Africa, Middle East, Asia and Latin America, and we are currently working together with over 50 major MNOs and financial institutions, all of them among the leaders in their respective regions, supporting them in providing over $12 million USD in daily loans to more than 750 million subscribers. But as we keep growing and expanding to new regions and services, we always keep in mind that we consider ourselves a social enterprise, and through this prism, the vision we share is to lead the global economic and social development through financial inclusion for all, especially in the emerging and underbanked regions of the world. A vision that takes up even more importance as the world still tries to get rid of a horrible pandemic.
As a company specialized in mobile financial and Fintech services, how do you contribute to financial inclusion in the regions you operate in, especially in emerging markets?
Financial inclusion is a fundamental part of reducing poverty and sparking economic growth. Especially in emerging regions where the traditional, brick-and-mortar banking sector is both slow-moving and underdeveloped, Fintech solutions jump in to bridge the gap for the people that are unbanked and may live in vast regions, where the closest physical location of a financial institution may be hundreds of kilometers away. And with about 1.7 billion adults still unbanked around the globe, according to the World Bank, there is still much room for improving people’s everyday lives and their wellbeing through Fintech services, so we still have a long way to go.
Channel VAS focuses on bringing affordable micro and nano finance solutions to these underbanked populations, to help them cover for basic needs for themselves and their small businesses, through the convenience of their mobile phones. As one of the main characteristics of the emerging markets is that, due to the lack of infrastructure from previous decades, they became mostly “mobile-first”, we are able to utilize their mobile internet connectivity to provide them with the opportunity to tap in to financial resources. So whereas banks often do not want to finance people with low income, we utilize mobile and telco data and, through our proprietary analytics technology, we overcome the limitations of the traditional banking system and reach these customers by implementing accurate credit scoring. Furthermore, we also try to support those who do not have yet access to a smartphone to utilize all this potential, by introducing flexible handset finance schemes in various regions.
What are the challenges that can hinder access to Fintech services and in what ways can Channel VAS counter them to provide its services to clients and customers?
There are several issues of various sizes that prohibit us from deploying our full potential for people to benefit from, further to the inherent developmental problems of the emerging regions described before. In the everyday field, for example, we try to address the “vicious circle of financial exclusion”: People are financially excluded from Fintech services because they cannot afford a smartphone, while the very reason of it is that they are financially excluded. Our efforts to break this circle of limited connectivity have led Channel VAS to the conception and implementation of handset finance methods, in order to provide people with an easy, affordable way of getting access to the technology they need to become financially included, as internet-enabled handsets usually are the only form of internet access for most of them. By getting devices in their hands, we improve the possibility for greater connectivity and better inclusion.
But mobile financial services go way beyond than just directly helping individuals in their everyday lives, as Fintech offerings are set to provide the necessary boost to regional economies overall. It is expected, for example, that Fintech’s contribution to Sub-Saharan Africa’s economic output will reach $150 billion by 2022. In order for this to happen, however, we need to greatly improve the whole understanding of Fintech by the regulators and governing bodies, both national and international, in these regions.
Regulators often retain a decades-old mentality and set of rules, plus they are often unwilling to change and adapt to the flow of things and the new conditions, something that comes in direct contrast with Fintech companies’ growth and their fast-moving technology. This lack of understanding is probably the biggest obstacle for Fintech companies to provide financial inclusion to so many people. To top this, traditional financial institutions often guard customer data way more than what would be necessary and are unwilling to share it safely and responsibly.
We strongly support the notion that by centralizing the data that is currently scattered among different entities like financial institutions, telephone companies, aggregators, insurers and payment services, we can reach a condition that will be beneficial to everyone involved. We, as Fintech providers, will be able to analyze the data to provide better solutions to the population for its financial inclusion, governments will see more mid- and long-term economic growth as a result, while the consumers themselves will have better and greater control over which entities can access their data.
Some problems also emerge, to an extent, to mobile money taxation that several countries have begun to impose in Africa. While taxation is understandable, governments will need to make them well-thought and designed properly, so as not to impact financial inclusion in a negative manner, especially in the long term.
Overall, governing bodies have to understand that they need to change, to be more flexible and to adjust to the new era, not only the technologically advanced one but also the post-pandemic one. We are trying hard towards getting this message through to them for Fintech and letting them know that we, as the sector’s pioneers, are more than willing to work together with them to set a uniform policy framework that will be beneficial to all and lead to a brighter future.
During the COVID-19 pandemic, mobile money services have thrived given their contactless model that is highly required in such circumstances. How did Channel VAS leverage that?
It is important to understand that, especially in developing countries with isolated areas and limited infrastructure, Fintech has always been a necessity for these people rather than a convenience, as it may have been seen in more developed countries. In the unprecedented times of this pandemic, people realized that this necessity has expanded by definition, as more and more people started to utilize remote and contactless transactions, either by fear of the virus or purely due to local lockdowns.
As Channel VAS, we feel that this global situation has accelerated the adoption of these methods, so we have been leveraging our data mining and analyzing capabilities to address this increase in demand. And we are building our services looking forward with the understanding that this pandemic situation was, in a way, a big “crash test” for people to understand and appreciate the value of Fintech offerings, a value that they are bound to return to again and again, now that they have discovered it. Overall, data is a key component in our effort to promote financial inclusion to more and more people. And in order to ensure the widespread adoption of this financial inclusion in the coming years, we must lean heavily on data science as the key driver for the sector’s growth.
Data analytics are one of the key capabilities of Channel VAS. How do data analytics help you to capture the best opportunities in the market of mobile financial services?
Data is, simply stated, one of the most integral parts of our business. Data science forms the foundation of modern market innovations, and big data has given us an unprecedented view into the needs of the customers, thus empowering innovation and providing better-suited offerings. In the financial sector, big data has revolutionized credit risk scoring and assessments, allowing Fintech companies to perform the sort of advanced analysis that was once the exclusive privilege of big financial institutions like banks.
At the same time, automated systems and AI can take time-consuming tasks like appraising risk on low-value loans and complete them in a fraction of the time. Furthermore, the more data we can have, the better our projections will be in terms of low-risk credit scoring. All these obviously rely on the actual capability that a Fintech company has, to not only properly process the given data, but also transform them into meaningful decision factors that will be appropriate for the customer’s credit level.
At Channel VAS we are incorporating a proprietary scoring platform that can capture hundreds of data points per customer and analyze them meaningfully, to reach useful conclusions through solid predictive methodologies. For this, we use the manpower of a very robust and expanding data science department, which supports our operations for credit scoring, in order to both minimize the risk and provide the proper solution to each individual customer.
Obviously, this again brings us back to the discussion and the importance of the availability of data and ensuring that there will be a transparent, yet safe and robust governing framework on accessing the maximum available data, to ensure that we can reach more and more people and provide them with financial inclusion.
The Fintech services market has become quite saturated. What differentiates Channel VAS from its competitors?
While the Fintech sector indeed grows exponentially with several mobile money services being launched in different countries, which is the very proof of both its success and its immense potential, Channel VAS has been leading on the forefront of the whole mobile financing services ever since their inception. We have seen through their evolution from simple money transfers to customized services that encompass almost everything a person might want to do, be it utility payments, airtime/data advances or small amounts’ loans, and we have been there from the very beginning to provide these services to them. By doing that, we have grown ourselves to an extent that our own status is in itself a guarantee for our services. So it was only natural that we have been acknowledged by international funds that have invested multi-million dollar amounts to our company so that we can expand even more and even faster, appreciating and trusting our robust roadmap that combines global growth and understanding of future developments, with laser-sharp focus on every business detail.
Another key differentiator is our committed investment on R&D, where we are utilizing cutting edge technology and machine learning with our decade-long experience, to create proprietary platforms that can deliver prediction accuracy and minimize credit risk.
Finally, coming from Africa ourselves as a company, we have a deep knowledge of the emerging regions in which we focus, which puts us at a distinct advantage. Simply put, we understand that Fintech is a connector, not a disruptor. By giving Fintech access to the unbanked masses in these regions, we provide them with the critical building blocks towards their essential financial inclusion, and not just a convenience model to make their lives easier. While some small local companies may have the same understanding, but not the capacity to support this scope, and on the other hand some bigger multinational entities may have the means but not the deep knowledge of a country’s or region’s intricacies, we combine the best of both worlds by integrating robust capabilities with a thorough understanding of everyday people’s needs in those regions.
2020 has been a very challenging year. How did you manage to maintain your leadership in spite of all the obstacles that emerged this year?
As economies were stricken across the world, some sectors and companies have shown strong business resilience against the pandemic conditions. Unfortunately, while Fintech has been on the forefront of supporting people, this has not been the case for several Fintech firms, especially those that lacked any solid foundation and operated under a limited capacity. Quite simply, they ran out of cash and had to close.
We have managed to be among the resilient minority that emerged unscathed, mainly due to the adaptability and the reflexes we have shown ever since the pandemic started, even though obviously even the biggest tech firms most likely did not have solid plans in place for a disruption of this magnitude. But one of the perks of being accustomed to providing “best of breed” technology in order to improve people’s daily lives, is that we can extend it to the way our own people work. We are fortunate to have access to our digital tools wherever we are so that we can work from any environment and location, which is imperative in today’s situation as we can minimize the risk for our staff across the globe, while ensuring business continuity and maintaining the top-level service that our clients expect from us. Of course, our company size and the valuable experience we have gathered along the road in this business also played a significant part, allowing us to make the necessary early adjustments and ultimately helping us prevail during these extreme times, emerging with a very solid 2020 business outcome despite the conditions.
In your opinion, what changes has the pandemic brought to the ICT industry and will those changes persist in the aftermath?
The effects that the pandemic will have in many aspects of both our businesses and our lives will be multiple and they will be shaping the future of industries in unexpected ways. The biggest change is the fact that mobile, contactless payments and transactions have been the option of choice for more and more people since the pandemic started, while the need for more airtime and data advances also increased, as people wanted to stay in touch with their loved ones, especially as regional lockdowns became the norm in 2020. The need for connectivity and accessibility through mobile devices has been proven more important than ever, during these catastrophic conditions and the relevant measures taken to counter them.
All these will not be reversed after the pandemic has subsided. People now realize that these digital tools that they turned to for help during this time are actually helpful and useful for them regardless of the conditions, providing them with valuable services, and they were not just a means of last resort while the “normal” ways were disrupted by the virus. And they will keep using these services that they were introduced to during the pandemic long after the latter has eclipsed, as what may have once been out of their comfort zone has now become an integral part of their lives.
The pandemic may also be the decisive catalyst for the wide adoption of mobile money, a shift that will affect the whole of the ICT sector that needs to adjust accordingly, while also ensuring that it has the necessary infrastructure in place to cope with the increased demand for these needs. So, network operators will need to work both on their internal structure as well as on forging new partnerships with long time providers of such mobile financial services.
And of, course, as people adapt to new circumstances, there will also be an abundance of post-pandemic opportunities for businesses. There will be new niches and exciting ideas and trends, especially in the cutting-edge technology sectors like ICT, so the main focus for us should be to keep helping innovative small businesses that may come up with these great new ideas, to give them the opportunity to flourish in the post-pandemic era. The certain thing is that a new world will emerge in the post-COVID era and fresh opportunities will emerge along with it, so it is in the hands of ICT businesses to proceed in the way that Channel VAS is already doing: By adapting to those changes, identifying the opportunities and embracing new and innovative ideas in order to lead the sector forward in this new era.
