Saturday, July 13, 2024

Revolutionizing the Ethiopian financial landscape


Abreham Tilahun is a seasoned banker with more than 18 years of experience in the financial service sector. He got his B.A degree from Addis Ababa University and MBA from Jimma University. He started his career at the former Construction and Business Bank being a bank clerk, then joined Lion Bank and served the bank in many areas including Manager- Branch Operation, Director, Alternative Banking Channels and finally AVP Retail Banking for more than three years before joining Kacha. He is now serving Kacha Digital Financial Service S.C. as CEO. Kacha is a premier digital platform that provides seamless financial services in Ethiopia. Kacha is the first private payment instrument issuer licensed by the National Bank of Ethiopia with a goal to promote financial inclusion and contribute to Ethiopia’s national digitalization ambitions. Kacha offers mobile money, bill payments, remittances, and merchant payments, making financial services accessible to all Ethiopians, especially those who are underserved and unserved. Capital caught up with Abreham for a candid interview about Kacha’s future plans. Excerpts; 

Capital: Can you provide an overview of Kacha Digital Financial Services and its core mission in the financial industry?

Abreham Tilahun: Kacha Digital Financial Service S.C. is a dynamic and innovative digital financial services provider, proudly licensed by the National Bank of Ethiopia as the first private payment instrument issuer. Kacha’s mission is to promote financial inclusion and empower individuals and businesses with easy and secure access to digital financial services.

Founded by a group of 13 visionary Ethiopian shareholders, Kacha has been working diligently to develop cutting-edge technology that allows us to offer a comprehensive suite of mobile money services. We are thrilled to have received our license from the NBE in June 2022, registered as NPS/PII/002/2022, with a capital of birr 200 million. The board of directors and senior executive management of Kacha were approved by the NBE on June 27, 2022, and we have been moving forward with unwavering determination ever since.

Under the National Bank of Ethiopia directive no. ONPS/09/2023 ( as amended), Kacha is authorized to provide a range of mobile money services, including digital savings, digital credit/financing, digital insurance, pension products, and inward remittances and more. Our state-of-the-art technology platform has been designed to accommodate innovative payment instruments, third-party integration, multi-tenant wallet capability, a shari’ah-compliant wallet, digital lending, digital insurance, digital savings, pension products, and a unified digital financial service platform.

We take pride in being a shareholder and member of EthSwitch, the National Switch, and have completed system integration, allowing us to be interoperable with 31 financial institutions. Additionally, Kacha is working to becoming Ethiopian market aggregator through indirect payment for Thunes, TerraPay, MFS Africa, and World Remit.

Capital: What sets Kacha apart from other digital financial service providers in the market?

Abreham: Kacha Digital Financial Service differentiates itself from existing players in the Ethiopian market through its omnipresent platform which is built in-house, private ownership, technological innovation, extensive agent network, collaboration and partnerships, and customer-centric approach. Kacha’s platform is accessible through Android plus iOS. Our USSD *677#, is available on both Ethiotelecom and Safaricom networks, providing seamless service to a wider user base. By leveraging advanced mobile technology and digital platforms, Kacha provides user-friendly interfaces, sturdy security features, and seamless integration with existing financial systems. As the first private mobile money operator, Kacha has the flexibility to innovate and adapt to market dynamics, enabling faster decision-making and tailored solutions. With an extensive network of agents, Kacha facilitates cash-in and cash-out transactions even in remote areas. Moreover, Kacha actively collaborates with financial institutions, telecom operators, merchants, and other stakeholders to create a holistic financial ecosystem. By placing a strong emphasis on customer satisfaction, Kacha delivers personalized services, responsive customer support, and continuous improvement based on user feedback.

Capital: How do you adapted to the evolving digital landscape and changing customer expectations?

Abreham: At Kacha Digital Financial Services, we understand the importance of adapting to the evolving digital landscape and meeting the changing customer expectations in Ethiopia. Here are some of the key strategies we have implemented:

First and foremost, we have embraced mobile and digital technologies. We developed a user-friendly mobile app and a digital platform that allows customers to make money transactions convenient using their smartphones. By leveraging these technologies, we provide our customers with accessible and seamless payment solutions.

To cater to different customer preferences, we offer multiple payment options. Our platform supports mobile wallets, card less money transactions, bank transfers, and even emerging technologies such as QR code payments. By diversifying our payment options, we ensure that customers can choose the method that suits them best.

User experience is of utmost importance in the digital landscape. We have invested in a well-designed interface, streamlined workflows, and efficient customer support to provide a seamless experience for our users. We constantly gather feedback from our customers and make iterative improvements to enhance their satisfaction.

Security is a significant concern in the digital payment realm. We have implemented robust security measures, including encryption, secure authentication protocols, and fraud detection systems. By prioritizing the protection of customer data and ensuring secure transactions, we build trust and confidence in our platform.

Collaboration with strategic partners has been a key aspect of our growth. We have forged partnerships with banks, financial institutions, and mobile network operators. These collaborations have allowed us to expand our reach, tap into existing customer bases, and leverage the expertise and infrastructure of established players in the industry.

Adapting to regulatory changes is also crucial for our business. We stay updated with the regulatory landscape in Ethiopia and ensure compliance with relevant laws and regulations pertaining to payment systems. By closely monitoring changes and developments, we proactively adapt our business model to remain compliant and provide a secure and trustworthy environment for our customers.

Furthermore, Educating and engaging customers is a priority for us. We run targeted marketing campaigns and awareness programs to educate customers about the benefits and convenience of digital payments. We actively engage with customers through social media, our call center, and feedback channels to understand their expectations and continuously improve our offerings based on their feedback. Also, to differentiate ourselves from competitors, we will offer value-added services which will attract and retain customers, encouraging frequent usage of our platform.

Capital: What are the key products and services offered by you, and how do they address the needs of your target customers?

Abreham: Kacha Digital Financial Solutions offers a range of services that directly address the needs of unbanked and under banked societies. One of their key offerings is digital payments, which allows individuals who lack access to traditional banking services to make secure and convenient transactions. By reducing reliance on cash, Kacha enables individuals and businesses to participate more fully in the digital economy, providing them with greater convenience, security, and efficiency.

Remittance services are another crucial aspect of Kacha’s offerings. Underserved communities often rely on financial support from family members or friends working in different regions or countries. Kacha’s affordable and reliable remittance services ensure that funds can be transferred promptly and conveniently, helping individuals receive the financial assistance they need in a timely manner.

Crowdfunding platforms provided by Kacha empower communities to raise funds for various purposes. This includes supporting entrepreneurial ventures, community projects, or addressing personal needs. By facilitating the mobilization of financial support from a broader community, Kacha enables individuals and groups with limited access to traditional funding sources to realize their goals and improve their circumstances.

Access to mobile communication is essential for underserved communities, especially in areas with limited telecommunications infrastructure. Kacha’s service allows individuals to easily purchase airtime, ensuring they can stay connected, access information, and engage in economic activities using their mobile phones. This access to mobile communication empowers individuals and businesses to stay informed, connect with others, and participate in various economic opportunities.

Kacha also offers micro loan services tailored to the financial needs of underserved communities. By providing accessible and transparent loan options, Kacha helps individuals and small businesses access credit for purposes such as investment, education, or emergencies. This financial support can be instrumental in enabling communities to pursue economic opportunities and improve their overall well-being.

Through its comprehensive range of services, Kacha Digital Financial Solutions addresses the specific needs of underserved communities. By providing secure, convenient, and affordable financial tools, Kacha helps bridge the financial inclusion gap, empowering individuals and communities to participate more fully in economic activities and improve their overall quality of life.

Capital: Can you discuss any recent innovations or advancements that Kacha has introduced to enhance its offerings?

Abreham: Through demonstrating a valuable impactful product Kacha is the overall Winner of the Visa Everywhere Initiative Ethiopia! 2023 and won a prize of 25,000 USD competing against over 100 + Fintech applicants in the country. which is a remarkable achievement that marks a significant milestone for us as a pioneer Digital Financial Service provider in Ethiopia. And the success is owed to the unwavering support and trust of our incredible partners, customers, employees, board of directors, National Bank of Ethiopia, and Visa for organizing this competition and providing us with such an incredible opportunity.

Kacha is also part of Bimalab insurtech accelerator program. It’s a partnership between the Swiss Re Foundation and FSD Africa to support promising insurance innovators and ventures in Africa.  It creates the room for innovators working together to create the future of insurance in Africa and Kacha is proud to be part of this program and working towards disruptive and innovative insurance service to Ethiopia.

Capital: How do you ensure the security and privacy of customer data in an increasingly digital and interconnected world?

Abreham: Kacha Digital Financial Services prioritizes the security and privacy of customer data. We employ robust data security measures, including encryption, secure protocols, fraud detection, AML module and firewalls. Our platform is INSA certified and we follow ISO27001 standards. We partner with trusted technology providers and conduct regular extensive security audits. Moreover, our employees receive thorough training on data security and privacy. We handle and store data securely. Our privacy policies are transparent, empowering customers to make informed decisions about their data.

Capital: What strategies do you employ to foster financial inclusion and reach underserved populations?

Abreham: Kacha Digital Financial Services S.C employs strategies to foster financial inclusion and reach underserved populations. This includes expanding outreach through partnerships with local organizations, establishing an agent banking network, and leveraging mobile money technology. Customer education programs raise awareness about our payment instruments, and we provide tailored products and collaborate with stakeholders. Through these efforts, we aim to ensure affordable and convenient digital financial services for underserved populations in Ethiopia.

Capital: Does Kacha collaborate with traditional financial institutions or fintech partners to enhance its service offerings? If so how?

Abreham: Absolutely! Kacha Digital Financial Services understands the importance of collaboration with both traditional financial institutions and fintech partners to enhance its service offerings. The company has established partnerships with banks, insurance companies, microfinances, and remittance agencies. These collaborations allow Kacha to leverage existing infrastructure and seamlessly connect with any bank account and mobile wallet account through its interoperable mobile money service. Moreover, Kacha has also formed collaborations with development partners, which further enhance its capabilities and expand its reach. By partnering with a diverse range of institutions, Kacha showcases its commitment to utilizing the expertise and resources of both traditional financial institutions and fintech partners. This collaborative approach enables Kacha to provide innovative and comprehensive financial services to its customers.

Capital: Can you tell us about the challenges in the digital financial business in the country?

Abreham: As a startup payment instrument issuer in Ethiopia, we are fully aware of the challenges that the digital financial business faces in the country. Our strategies are specifically designed to effectively address these challenges and ensure our success.

One of the foremost challenges we encounter as a startup is establishing partnerships and building trust with key players in the ecosystem. In many cases, initial skepticism can hinder collaboration. However, over time, our reputation for reliability, robust technical and business capabilities, and strict compliance adherence have led to a notable shift in perceptions. Trust is gradually being built as stakeholders recognize the credibility and expertise that Kacha brings to the table.

Secondly, we understand that limited knowledge and understanding of digital financial services can create barriers to adoption. To tackle this issue, we place a high priority on customer education and awareness programs. Through these initiatives, we aim to enhance financial literacy and promote the numerous benefits and robust security measures associated with digital payments. Building trust and confidence in our services is paramount, and we are dedicated to addressing concerns related to fraud, data breaches, and cyber threats.

Thirdly, we recognize the critical importance of financial inclusion and reaching underserved populations, particularly those residing in rural and marginalized communities. To overcome the challenges associated with this, we are actively working on strategic strategies to improve accessibility to the last-mile. Additionally, we are forging collaborations with local partners to ensure that our payment instruments are accessible to a broader population, thus fostering greater financial inclusion.

Lastly, we are well aware of the increasing competition within the digital financial services industry in Ethiopia. The presence of multiple payment providers can lead to market fragmentation and interoperability challenges. To stand out from the crowd, we differentiate ourselves by offering innovative services, delivering an exceptional user experience, and establishing strategic partnerships. These efforts enable us to provide seamless and comprehensive financial services to our valued customers.

By proactively addressing these challenges, we are highly confident in our ability to succeed and make significant contributions to the growth and development of the digital financial services sector in Ethiopia.

Capital: What is Kacha’s vision for the future, and what initiatives or expansions can we expect to see from the company in the coming years?

Abreham: Kacha Digital Financial Services S.C has a vision for the future that focuses on driving financial inclusion, expanding its product offerings, and embracing technological advancements.

Kacha aims to expand its operations beyond its initial target markets and reach additional regions within Ethiopia. This expansion would allow Kacha to extend its services to underserved communities and broaden its customer base.

Kacha will introduce new financial products and services to cater to the evolving needs of its customers. By diversifying its product portfolio, Kacha can provide a more comprehensive suite of financial solutions in addition to focusing on leveraging emerging technologies to enhance its digital financial services.

Kacha will continue to prioritize customer education and financial literacy initiatives to empower its users with the knowledge and skills necessary to make informed financial decisions which could involve conducting workshops, developing educational materials, or partnering with local organizations to deliver financial literacy programs.

It’s important to note that as a startup, Kacha’s specific plans and initiatives may evolve based on market conditions, customer feedback, and regulatory developments. However, the overarching vision of driving financial inclusion, expanding service offerings, and embracing technology is likely to guide kacha’s future growth and development.

Capital: How does Kacha leverage data analytics and artificial intelligence to personalize and improve the customer experience?

Abreham: At Kacha, we understand the importance of providing tailored services to our customers, and data analytics and AI play a crucial role in achieving this.

Through robust data analytics, we gather and analyze customer data, including transaction history, spending patterns, and preferences. This enables us to gain insights into individual customer behavior and needs. By understanding our customers better, we can personalize their experience by offering relevant product recommendations, customized offers, and targeted promotions.

Artificial intelligence further enhances our ability to personalize the customer experience. AI algorithms analyze vast amounts of data to identify patterns and trends, enabling us to predict customer preferences and anticipate their needs which allows us to provide proactive and personalized recommendations to each customer, enhancing their overall experience with Kacha.

Moreover, we are working on an AI-powered chatbots and virtual assistants that are integrated into our platform to provide real-time support and assistance to customers. These intelligent systems can understand natural language and respond to customer queries promptly, improving response times and customer satisfaction.

We also utilize AI algorithms for risk assessment and fraud detection. By continuously monitoring transactions and analyzing patterns, we can identify suspicious activities and take immediate action to protect our customers’ financial security.

Overall, our use of data analytics and artificial intelligence empowers us to deliver a personalized and seamless customer experience. By understanding our customers’ needs, providing timely assistance, and ensuring the security of their transactions, we strive to exceed their expectations and build long-term relationships based on trust and convenience.

Capital: What are the key factors that contribute to Kacha’s competitive advantage in the digital financial services sector?

Abreham: As a startup digital payment instrument issuer in Ethiopia, Kacha Digital Financial Service S.C. has several key factors that contribute to its competitive advantage in the digital financial services sector.

Kacha leverages cutting-edge technology that is built in-house and fosters a culture of innovation. By staying ahead of the curve and adopting emerging digital payment solutions, Kacha can offer customers convenient, secure, and user-friendly digital payment instruments.

Being based in Ethiopia, Kacha has a deep understanding of the local market dynamics, customer preferences, and regulatory environment. This knowledge allows the company to tailor its products and services to meet the specific needs of Ethiopian consumers and businesses. Also, Kacha actively seeks strategic partnerships with key players in the digital financial services ecosystem. Collaborating with banks, merchants, technology providers, and other stakeholders enables Kacha to expand its reach, enhance its product offerings, and provide a seamless payment experience for its customers.

Ethiopia has a financial inclusion rate less than 45 %, and Kacha is committed to addressing this issue by promoting financial inclusion through innovative digital financial serivces. Its digital payment instruments provide access to financial services for individuals who previously relied on cash transactions, thus empowering them to participate in the formal economy. Kacha places a strong emphasis on understanding and meeting the needs of its customers. By offering personalized and tailored solutions, providing excellent customer service, and continuously gathering feedback, Kacha can build strong relationships with its customers and foster loyalty.

Further, adhering to regulatory guidelines and maintaining compliance is a fundamental aspect of Kacha’s operations. By ensuring compliance with relevant laws and regulations, Kacha builds trust with customers and stakeholders, and positions itself as a reliable and trustworthy digital payment instrument issuer.

These key factors contribute to Kacha’s competitive advantage in the digital financial services sector, enabling the company to differentiate itself, gain market share, and drive the adoption of digital payments in Ethiopia.

Capital: How does Kacha approach regulatory compliance and ensure adherence to relevant financial regulations and standards?

Abreham: To approach regulatory compliance and ensure adherence to relevant financial regulations and standards, Kacha Digital Financial Services S.C stays updated on the latest financial regulations and standards applicable to the digital financial services industry in Ethiopia.

we conduct thorough regulatory risk assessments from time to time to identify potential regulatory risks and gaps in compliance which evaluates the company’s operations, processes, and systems against applicable regulations and standards which will help us identify areas that require attention and enable the implementation of appropriate risk mitigation measures.

We will also establish vigorous internal controls and compliance monitoring systems to ensure ongoing compliance with regulatory requirements that includes implementing processes for regular internal audits, compliance reporting, and training programs to educate employees on regulatory compliance obligations.

In addition, we will actively engage and maintain open lines of communication with regulatory authorities, such as the NBE, to stay updated on regulatory developments and seek clarifications on compliance requirements and Participate in industry forums and associations to stay informed about industry best practices and regulatory discussions.

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