Makers of Indomie to Venture into Digital Banking
Makers of popular Indomie noodle, Tolaram Group is planning to leverage its African distribution network to launch into Digital Banking.
Founded by a Singaporean family, the Tolaram Group has grown to become a $1.8 billion empire through the production of fast moving consumer goods (FMCG) like Indomie noodles, Power Oil, Power Pasta, Hypo Bleach, and Dano Milk.
The group is now looking towards the burgeoning fintech market in Africa. According to Bloomberg, the group is looking at markets in Nigeria, Ghana, South Africa, and Egypt.
Growing digital banking in Africa
Digital banking in Africa has been growing and evolving rapidly over the past decade. The increasing rate of mobile phone adoption along with ever-increasing Internet penetration has further made it a golden age for fintech.
Across sub-Saharan Africa, mobile money grew 43% in 2017. The speed to market and digitisation of banking services has continued to drive its adoption due to its ability to make everyday banking more accessible.
In Nigeria, only 30% of adults have a formal bank account. The emergence of digital banks like ALAT and Kuda with their promise of improving ease of banking over traditional banks has been a selling point that has kept the digital banking market booming.
Increasing competition in the Nigerian digital banking space
The digital banking market in Nigeria has seen stiff competition with the likes of Wema bank’s ALAT, Kuda and of course new entrant, Globus. However, there is still a huge market to cover with large number of the unbanked population.
Tolaram Group’s plan to launch into digital banking isn’t groups first banking business. They own Bank Amar in Indonesia, where they have the experience of offering millions of customers access to credit over mobile phones. The bank has loaned almost $300 million to about 300,000 customers.
According to Kunal Adnani, leader of Tolaram’s mergers and acquisitions team, the group will be looking to leverage the same technology and system into the African market. “What we’re looking to do is take the same technology, the same systems, and the same learning into African markets where we have a presence, albeit in a very different area,” he said.
He added that the company also plans to leverage its thousands of distributor network to increase volumes. “We have access to thousands of distributors in these markets and that can also have a knock-on effect on our business. The more credit we can give them, the more they can increase volumes.”
According to a report, the Group is already working out some sort of partnership with Africa-focused digital lender, Tala. However, It is unclear which strategy the group intends to adopt in its digital banking journey.
It is also unclear if it will provide full financial services like Kuda or if it will just support only deposits and credits.
Whichever method the group decides to adopt, it needs to enable the use of its digital banking platform in the purchase of popular consumer goods like Indomie noodles.
The digital bank could therefore leverage some of the popularity a brand like Indiomie has in the country.