Stephanie Mestrallet, vice-president of Global Philanthropy at JP Morgan.
Stephanie Mestrallet, vice-president of Global Philanthropy at JP Morgan.

In a novel collaboration between US banking giant JP Morgan, UK Aid and Catalyst Fund, two local fintech start-ups have been chosen to develop businesses that aim to extend responsible financial services to underserved communities around the world.

Catalyst estimates that as many as 3-billion people are underserved by the global financial system, meaning they cannot access the full range of financial services or do so affordably.

“We look to do this by providing bespoke venture-building support, a grant of up to $100,000 and connections to a network of potential investors and corporate partners so that the start-ups are in a position to raise funds from investors and scale,” said Catalyst Fund director Maëlis Carraro in an interview with Business Day.

The $15m (R215m) commitment by JP Morgan’s Philanthropic Foundation and UK Aid to further facilitate the work of Catalyst was announced on the sidelines of the UK-Africa Investment Summit that is being held in London this week.

The two SA fintech start-ups that have been selected to participate in the incubator are Meerkat, a debt counselling and savings product company launched to help consumers gradually reduce their reliance on debt and improve their overall financial health, and Spoon, an online stokvel management system that aims to bring more transparency and security to the traditional practice of stokvels.

The two fintechs are part of a group of 30 start-up companies Catalyst aims to develop over the next three years. Besides SA, Catalyst will support start-ups in Kenya, Nigeria, India and Mexico.

Stephanie Mestrallet, vice-president of Global Philanthropy at JP Morgan, said JP Morgan seeks to extend access to financial services to promote economic inclusion, and this collaboration with Catalyst Fund is a “powerful way to achieve this”.

“We helped seed this programme over the past five years and are increasing our commitment in the years ahead.”

Besides a grant of up to $100,000 provided by UK Aid, the fintechs will receive technical assistance from a panel of experts provided by Catalyst. Many of these include former executives and investment advisers whose objective is to prepare the companies to raise funding from traditional venture capital funds. The mentors and advisers also facilitate introductions to investors interested in fintech and emerging markets. The incubation programme will run for six months. 

Over the past four years, 54 companies have gone through the programme, including local fintech MobiLife, which provides simplified life insurance through a smartphone app with none of the standard requirements. The company recently announced a partnership with Standard Bank.

JP Morgan through its philanthropic foundation will provide additional funding of $3.1m (R44.4m) for the programme as part of a $125m (R1.8bn) commitment over five years to promote programmes around the world that aim to improve financial health in communities.

thompsonw@businesslive.co.za