10 Mar Bancore Newsletter March 2018
The first two months of 2018 have been challenging for Bancore, but also quite inspirational. Challenging because the projects outlined in the December 2017 Newsletter have progressed slowly, but at the same time the progress has been solid and consistent, as evidenced also by feedback from potential investors and business partners who frequently confirm to us that our strategic direction is both realistic and original – we are different to our competitors, and are addressing the potentially most promising business areas.
These were outlined in our December Newsletter which we attach again, in case you want to reacquaint yourself with our thinking, and we will update you further in this Newsletter.
“PAYMENTS” – Bancore intends to become the World’s Preferred Mobile Payment Platform
Let’s set the tone for our modified strategic emphasis by changing the terminology with which we describe ourselves: Bancore’s platform can perform a lot of functions and be of help to users with quite different needs, but Bancore is first and foremost a payment company – more precisely a mobile payment company with a unique in-house developed technology platform. By calling ourselves a MOBILE PAYMENT COMPANY we are repositioning ourselves slightly differently to the old Bancore” which, by emphasising financial inclusion of unbanked citizens of emerging countries, risked being seen as a charitable institution. As you know, we would definitely like to gradually reach the perhaps 3 billion unbanked people in the world, but we are a for-profit company and will secure own oxygen mask first, before helping anyone else.”This is what we are currently trying to do by executing the strategy that we outlined in our December Newsletter and elaborate on it in the following.
Bancore’s 4 Divisions
By “Payments” we mean any kind of financial transaction between two parties, incl. P2P, remittances, bill payment, payroll, subsidies, airtime purchase, and any future transaction that can benefit from the global financial infrastructure provided by Bancore. Among all these options we have narrowed our focus to 4 business areas that will in turn be approached sequentially and differently in order not to spread our limited personnel resources too thinly. They are:
1. Payment Gateway
Main features: Large-scale payment processing for remittance companies (SmallWorld is our key customer in Nigeria and will reach a 2018 transaction volume of $100M – other companies and countries to be added). Add to that our joint effort with GTP to introduce a Pan-African Gateway that will facilitate settlement between otherwise unrelated banks in all African countries. We offer low fees, but also have to accept that, to be competitive, fee income is only around half a percent of transaction volume.
2. Consumer Services
Main features: Bancore’s original “claim to fame”, i.e. instant opening of a bank-equivalent virtual account and issuance of a prepaid virtual VISA or MasterCard at zero upfront fee to the user. Bill payment, online purchases, and access to Bancore’s Intergrated services marketplace for remittance airtime purchases, and much more to come in cooperation with external partners – see examples under Priority Projects below.
3. Enterprise Services
Main features: aimed mainly at Small and Medium Enterprises (SME) who can use this for cashless distribution (retailer can pay wholesaler by mobile phone immediately prior to product drop-off), electronic payroll (as opposed to cash), and management of employee benefits and expenses (travel costs incl. car expenses).
4. Platform Provider
We have decided to take the step to license out a white-label version of our payment platform. We do this because the quality of our platform generates a lot of attention from companies in the payment space, and we can make quite a lot of money every time we land a license deal. For Bancore as a licensee this obviously comes with service obligations, and we will also be careful not to license to potentially harmful competitors.
Other Noteworthy Developments
I. Consumer Cards
We are accelerating the issuance of prepaid cards, first in Nigeria, then in Europe (see below), and thirdly through our Pan-African Gateway project which will cover most African countries. We expect to reach 350,000 prepaid cards in Nigeria in Q2 and more than a million cards by year-end. Added to our 1M+ cards in Vietnam, Bancore will have at least 2M cards in circulation in December 2018.
II. Increased Shareholding
Bancore HQ is acquiring Bob Merrick’s (GTP Founder/Chairman) shareholding in ChamsMobile, bringing Bancore’s ownership of this JV company to almost 50%.
III. Focus in Nigeria
We are generally reviewing the future structure of our Nigerian JV and, with our narrowing of business focus, there is a strong possibility that we will be operating under the name ‘Bancore Nigeria’.
IV. European Launch
Bancore has signed a JV agreement with a European processor already hosting several banking groups (announcement to follow shortly). We will go live around May 1, 2018 and the agreement will, in addition to the normal footprint advantages, give us an additional MasterCard BIN-sponsor and multiple currencies. A separate agreement, also to be announced in the next few weeks, will give us access to 400,000 European points of sale for issuing vouchers. Furthermore (detail to follow) we will be able to perform socalled “passive issuance” (i.e. no advance consumer opt-in is required) which means that within a card limit of Eur 250 we will basically be allowed to issue a card to anyone around the world.
V. Database Aggregator Partnerships
In addition to giving online marketeer clients of ours access to exploiting our own databases to sell their products, Bancore will soon play a more active role in instigating mobile campaigns for suitable product categories, possibly including microloans and insurance. Bancore has a payment platform sophisticated enough to process instalment purchases or subscription sales to unbanked customers.
2018 Operational Budget
We will separatly distribute Bancore’s updated Operating Budget for 2018. Due to our revised strategic focus, we expect it to show results superior to those in the December 2017 Newsletter.