34 EFFECTIVE PARTNERSHIPS TO REACH NEW MARKETS Our research encountered numerous partnerships between major global financial brands and fintechs aimed at serving these segments profitably. Mastercard and Net1. Mastercard is partnering with fintech Net1 and with Grindrod Bank, a large South African commercial bank, to open bank accounts for 17 million unbanked recipients of social grant payments from the South African government. The partnership is part of a largereffortbythatcountry’sgovernmenttodigitizethese payments for greater efficiency and security. Grindrod Bank provides the banking license for the operation and the bank accounts for the new customers. Mastercard provides access to point of sale (POS) and automatic teller machine (ATM) networks. Net1 provides the biometric technology and customer onboarding process. To reach low-income unbanked South Africans, Net1 developed a “cash assassination kit,” a suitcase containing tools to create a biometric identity (including a fingerprint reader, microphone, small camera and internet connectivity). About 2,500 such suitcases were set up in a variety of public locations such as the South Africa Social Security Agency offices, churches, town halls and temporary tents for recipients to visit and complete their registration. New registrants verify their identity, open a bank account and instantly receive a PIN-protected Mastercard debit card. The entire process takes about 10 minutes. Social grant payments are then disbursed into the new bank accounts at Grindrod and can be accessed through the debit cards at any location where Mastercard is accepted, including the POS and ATM networks. The partnership required Net1 and Mastercard to integrate their technologies onto a single chip that could support biometric and payment functionality. Beyond providing access to 17 million low-income social grant recipients, the partnership has created more knowledge for Mastercard, which has used the lessons learned to engage with other businesses and governments to combine payment capabilities with biometric authentication. Société Générale and TagPay. Société Générale, Europe’s sixth largest bank by assets, put out a call in 2015 for technology partners to develop a new mobile money brand. The bank decided to work with a fintech startup for a number of reasons. While working with a mobile network operator would have offered an easier path, the bank worried that an MNO would soon seek a banking license of its own and begin operating independently, taking with it the very customer relationships Société Générale was trying to develop. The bank also wanted to set its mobile offering apart by accepting funds from any operator rather than being tied to just one MNO. A partnership with the digital banking platform TagPay— which provides digital solutions for about 20 other financial services providers, including Cofina and Trust Merchant Bank—provided the opportunity to achieve all these aims. TagPay operates the platform on which customers of Société Générale’s new mobile money brand, YUP, can transfer money. TagPay keeps a ledger of all the transactions, which are backed by a pooled account at the bank. The new YUP brand was designed to bring unbanked customer segments into the financial mainstream with fully mobile-enabled banking products. Building on YUP’s base in Ivory Coast and Senegal, Société Générale aims to reach one million new clients by 2021. To ensure that the partnership retains the necessary stability to achieve those goals, the bank has taken an 8 percent stake in TagPay. Along with basic banking services and money transfers, low-income customers also need insurance, a financial product that has historically proven especially difficult to deliver sustainably below a certain price point. Here too, fintech partnerships hold real promise. AXA and MicroEnsure. Like many large insurance providers, the France-based multinational AXA (ranked third in Forbes’ global ranking of insurers) built its IT and back-office systems with higher ticket value policies in mind. Each new policy can cost AXA a few dollars in processing costs, so the dollar-a-month premiums associated with low-income segments make for an unviable proposition. In 2014, AXA acquired a 10 percent stake in MicroEnsure, a UK-based social enterprise founded to expand insurance coverage among low- income people. AXA now uses MicroEnsure’s Global Products Platform to handle all data from every step of the low-income customer journey (rather than breaking