Why Fintech startups should take MMM’s “disruption” more seriously.

Disclaimer: I don’t care about MMM itself and believe that individuals who invested took the risk while they were well aware of the scheme’s volatility. Kindly respect their decisions as you would if they still get a huge payday.That said, Ponzi schemes are illegal and hurt every economy in which they have thrived.

If there is one definition of 2016 for tech and startups, it’s “2016 the year of Fintech”. Many giant strides in fintech were made across the global financial ecosystem and none more relevant than the opening up of Sub Saharan africa’s financial regulations that enabled fintech innovations. One thing that most innovators and probably the industry at large have not really considered is the impact a Ponzi scheme as popular as MMM will have on the fintech scene. For example a Fintechpreneur was recently talking about how he has spent 5 years conceptualizing, building and getting licenses for his uberized lending platform. The most comments on that post were direct comparisons to MMM. Questions that took the format; Isn’t this another MMM? What makes this troubling is that MMM marketed itself heavily as a break from the old financial systems and order. MMM purposely took on the role of “ the disruptor” which was their PR strategy and they used that to push signups, a reported 23 million of them. Why this is important is because when the conversation switches to Fintech two key factors determine success and significant impact.

i. Regulations, which are of course there to protect people’s money and livelihoods and

ii. Trust, which consumers need to have in order to adopt a financial innovation in any meaningful numbers.

The rise to popularity and subsequent temporary freezing of Mavro payouts in MMM will significantly impact these two factors as regulators and authorities like the CBN, SEC and EFCC begin to promote more draconian regulations across all financial sectors in a bid to forestall any re-emergence of schemes like MMM. This will immediately result in a downward trend in Fintech investments and even innovations as the ease of doing business in the financial space reduces drastically as opposed to the upward trend we saw pre-MMM. Secondly, with numerous people affected and the post-freeze press MMM got we can safely say that the average citizen will become jaded towards any new financial innovations surrounding the financial space after hearing the “MMM horror stories” on mainstream Nigerian media. We have begun to see that with Bitcoin trading which was steadily gaining popularity pre-MMM and now is suddenly considered another MMM.

All in all for Nigerians to regain their confidence in financial innovations by Nigerians and for Nigerians beyond the pall of traditional card payment startups, fintech startups have to up their PR game and create word of mouth groundswells around their innovations. Yes it will be a herculean task but it will definitely pay off if it can be done.

If you have an amazing idea surrounding #HRTech, #Fintech or #startups in general shoot me a tweet I’d love to hear about it.