Bridging Traditional Fintech with Decentralized Finance - Motunrayo Koyejo

We are calling on Motor to teach us or to let us on bridging traditional fintech with traditional finance with decentralized finance. Sorry. Thank you. My name is Mutayo. I am a software engineer.

I currently work in a financial technology company in Lagos, Nigeria. So today I'm going to be speaking on how we can bridge traditional financial applications with defi. Um many of us here work with defi but you know what defi is right? So um when I was submitting this um proposal I was like why do I want to give this talk and then I realized that we have so many like disconnect between how like the real life work how money works in real life and how money works in web 3. So I'm going to like try my best to explain how we can bridge bridge the gaps.

So firstly um fintech has changed how we move money in Africa Nigeria especially. You'd agree with me that you can be in this room and you can send money to your sibling in the university and they will most likely receive it instantly. Am I correct? You guys are not giving me the response. You can be here in this room and open your phone and decide to like invest in maybe um in a financial asset in money markets and you can do it right on your phone and at the end of the month you get your interest.

Is that correct? So um fintech has made like a lot of things so easy and then if you look at the web three aspect there are so many people that don't even understand how like things work. So I have a slide that says why the stock. So and then this explains that um because fintech has you're not in my slide. Okay.

So um I was explaining that fintech has made like financial services very easy especially here in Africa and then I used the money like transfer banking example which most of us agree with but there are quite a number of limitations to that right there are I fees for example even if you transfer money to somebody for free the bank actually pays do you guys know that banks actually pay like oh if you use op pay now money point and you're transferring for free. Do you know that there's a there's an hidden cost that the bank has to make just so that you can make that transaction. If you use a traditional bank, you probably have to pay like 57 naira. Correct. Yeah.

So the transferring money or moving money around in web two costs money, right? This is one of the limitations of moving money in web 2, right? And then there we have crossborder barriers. I cannot now say I want to send money to somebody in Ghana like Ghana that is literally here in West Africa. Let's even say let's use Ben Republic as as a good example right now.

I can't send money to somebody in Coutonu without going through a lot of hassle like going to the bank like it's it's so confusing like Ben is literally like 3 hours away from us and I can't send money to somebody in Ben Republic and then they'll receive it like immediately. So now imagine sending somebody in Ghana or it's even easier to send money to the US than to send money to somebody in West Africa. Has anybody tried sending money to somebody in West Africa? You guys don't have family members or friends in Okay, so this is one of the limitations of the fintech and then the infra infrastructure is weak. So it's not um it's not strong enough to handle a lot of things.

A lot of our banks are still running on um code from like the '9s, the 1980s. And then for a bank upgrade, you just see that Zen Bank would just go down for a whole day. Has anybody experienced bank down times?

I'm sure most of us have. I mean, this topic is very interesting to me because it's something that is very familiar to all of us. So, if you look at on the web 3 side, you can transfer USDT. Let's not even use USDT. You can transfer Solana to somebody here now even if the person is in Australia or even if they're in hell fire as long as as long as they on the heads right they're going to receive it.

Do you agree?

Yeah. So um web 3 offers like both solutions but the problem is that it lacks like real world groundings. Things are working as they should work. It's easy to send money but nobody knows how to do it or most people don't know how to do it because it is rough to use. It's it's not user friendly like you have to be a native crypto user to understand how to how to use web 3.

I don't know I don't know when you guys got into crypto but I got into crypto like or I started playing around with crypto maybe in like co year 2020 and for like like I gave up I left I came back I'm like what's happening here I'm sure most of us have that experience or would have had the experience in the past. So this is one of the limitation. I've explained the limitations of financial technology in Africa and then even though web 3 offers like both solutions this is one of it. So um I've probably talked about this slightly but I'm going to emphasize on it. So today in in Africa fintech we have mobile money.

I mean in some African countries empa I think that's what they're trying to make OPE do but theirs is more of agency banking. We can send money without internet. USSD, you have your phone. You don't have access to the internet. You can send money to somebody.

You can buy air time. You can do a lot of things with just USSD. We have wallet based payments. But we experience currency instability. You have naira.

You want to send CDs or you want to send dollars and then maybe before by the time you send the money to the person, the value of the money you sent would have reduced because na is shaky. anybody experienced that? So, I'm just I'm trying to key into our real life experience because this is something that a lot of people would have experienced. Then there's remittance cost. You probably want to send like $100 and then they asking to bring $10.

It's like 10% like are you God? So, yeah. Then there's KYC bottleneck. Um before you open account you have to you know submit your BVN take a picture a live picture you know submit a lot of KYC requirements and then it's not it's not easy it's not the interoperability is not is it's not seamless it's limited because you can't easily like connect to a lot of things right and um I said here that users trust the system that they can see and understand people have used like fintech products I mean before fintech got to this stage there was a time where people could not trust opening online banks like you say oh I have a bank with scooter what is kuda do they have a bank I can't put my money there but now even our parents use ope like everybody has opampe even older people surprisingly right so um fintech has done like a lot of like ground work that has made like things easier so um what web 3 offers so this is coming from the previous slide that talks about like the challenge endings of fintech. And then web3 offers decentralization stable coins which means that you can protect your value even if if you send one USDT from here to wherever the person will get one USDT apart from the of course fees the gas fees and all of that but the person will get the same amount you send the the same value and then you can for you can use smart smart contract to like move things around and then it's transparent somebody can send money and then you can go and trace it.

You can you can trace um you can trace what somebody did like last week, last month without needing to get to their bank asking them to submit account statement. Everything is practically open. So you can see it right and then you can easily reclaim like your financial identity. So now I want to go to where web three for shorts and this is like one of the important reason why we're having this talk. Um on boarding it's not so easy to on board people in web three or into the into yeah in web three right when people want to maybe create an account you know they need like seed phrases they have to keep that you have to explain that if you if you if you lose this seed phrase your money is gone for life you have to like they you have to explain gas fees to them then the regulation at the moment is a bit limited which means that um in most African in African markets basically The government can come tomorrow and say okay I mean our government came two years ago and said we cannot trade crypto they can come again and say okay this is what's happening again like things change because the regulations do not exist and then there's limited access to like a lot of stuffs also for expert knowledge knowledge apps are built for just native users so people people open apps and they don't understand what's happening because it wasn't built for them it was built for people that already understand crypto This is one of the problems with web 3.

So um I want to talk on what we can learn fintech lessons that web 3 should learn and I'll just try to wrap it up now because I'm almost done with my time. Right. So one thing that web three can learn from fintech is to make on boarding easy. For example, if you want to on board on some bank applications, sometimes they will allow you on board first get an accounts number before they start like disturbing you for like other things. Do you agree with me?

Then they can also like use like agents network and USSD. If you go to Zanfire hour today, you will see like a money point POS merchants. Like if you go to deep places, you can use USSD even without internet to um send money. So web 3 doesn't have that. You have to have internet.

You even have to have an Android phone at least, right? You have to have a good phone to be able to do that. And then we have to think of compliance and transparency and how to support customers especially like early people that are not very um that are not deep into crypto yet. So um I'm trying to wrap up fast so that um so I'll just go to my my final thoughts. Yeah.

Yeah. The pathway I'll wrap up here. So web two and web 3 people can collaborate together to try to like build stuffs that would make that would for example you're building a web 3 app you don't have to think of um building just for crypton native people you can build for people that are not very deep into web 3 yet make the onboarding friendly you know build products with local constraints in mind for example in Nigeria you know that a lot of people don't have access to like um internet so when you're building a product a web 3 product think about them a web three financial products. Think about them. You know, talk to regulatory people from starts.

Don't just build and expect that they will conform to what you already have. And then translate the UX. Make the UX better. So, I'm going to stop now. Yeah.

Thank you everybody for this session.