White Paper: The Financial Services Cambrian Explosion

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How growth markets are innovating for the next 2 billion customers

Apis Partners has published its 5th White Paper, which covers the topic of Financial Inclusion.


On 29 December 2003, former United Nations Secretary-General Kofi Annan said: “The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. Together, we can and must build inclusive financial sectors that help people improve their lives.” Given the economic and social benefits of financial inclusion, it is not surprising that influential global policy circles, foundations, regulators and governments are pushing for greater financial inclusion and promotion of alternative systems in emerging markets.

Although most regulators in emerging markets are actively seeking to tackle the problem of financial inclusion, the approach taken by each individual country differs and has resulted in varying degrees of success. It is yet to be seen how these countries fare against their long term commitment to financial inclusion, in this paper we aim to analyse the optimal degree and type of regulation.

Given the broad scope of this topic, we have used a sample of five representative countries, namely India, Indonesia, South Africa, Kenya, and Nigeria – each of which has financial inclusion as a stated developmental goal whilst having approached the problem differently with varying degrees of regulatory intervention. For consistency and comparative purposes, we have examined each country’s approach to what we have defined as the five key regulatory enablers towards financial inclusion.

We expect that the absence of traditional legacy financial infrastructure in emerging markets, coupled with the presence of an enabling regulator, presents an environment ripe for innovative business models and alternative distribution mechanisms in financial services. All this innovation, and related “friendly” regulation, is taking place within the backdrop of the global financial system currently being at an important inflection point, with financial institutions having to adapt to an environment of tighter credit and lower economic growth, increased government intervention, stringent compliance requirements and, most recently, several direct and stated threats to the previous pace of globalization.

This white paper does not intend to make any recommendations for the future architecture of financial systems or for the optimal regulatory approach to financial inclusion. However, we do hope that our comparative analysis will serve as a helpful data point in the debate on how to promote financial inclusion and, perhaps, on how to prepare the financial sector for the next two billion customers. For our sector, we believe that this has the potential to be a true Cambrian Explosion.

Please download the full copy of the white paper here: Financial Services Cambrian Explosion

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About Apis Partners

Apis Partners (www.apis.pe) is a private equity asset manager that supports growth stage financial services businesses in Africa and Asia by providing them with catalytic growth equity capital. Apis Partners’ core team is composed by 16 professionals based in London and Lagos, and with specialised expertise in financial services and technology in growth markets.
Apis Partners’ operating network includes on-the-ground presence in 5 countries and over 20 additional financial services sub-sector experts.

Apis Partners is highly conscious of the developmental impact that the provision of growth capital for financial services in growth markets can achieve, and financial inclusion is a core tenet of Apis Partners’ investment mandate.

Apis Partners LLP, the manager of Apis Growth Fund I, is authorised and regulated by the Financial Conduct Authority (auth. n. 628289).

Media contacts:

Apis Partners (attn. Camarco), Ed Gascoigne-Pees, +44 20 3757 4984, [email protected]