“Interswitch: unfortunately now takes too long to innovate, when you look at history: you will discover that the likes of Flutterwave, Paystack and basically all fintech have ridden on the infrastructure including market systems created by INTERSWITCH,…By the way both Flutterwave and Opay are more valuable by billions of dollars than interswitch which is the father and mother of them all” – a member commented on this piece on Interswitch Verve.
My Response: It is beyond innovation. In this world, where you operate is more important, in most cases, than your efforts and innovation capacities. I will use this curve – the Smiling Curve – to explain. (see image).
When you receive $100 in your US bank account, the bank does not take any fee. But when you receive the same in your PayPal wallet, as payment, you will be off by at last $3. While someone can argue that the money kept in the bank can be used by the bank to do lending, we can also posit that the funds in the PayPal wallet can also be deployed by PayPal into many other profit-making activities. My point is clear: the banks do not capture a lot of value while PayPal and others like it do.
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You can explain what is happening in a curve: the smiling curve. The companies which are at the center capture least value, and most times, there are the ones which support the ecosystem the most. But those at the edges capture the most value even though they do not provide a lot of catalytic support in the ecosystem.
PayPal and Apple Pay operate at the edges and extract tons of value while the US banks remain lost in the center capturing just a small value. Indeed, where you operate on that curve determines the value you can create and capture, well more than the efforts you are putting in. You can be working really hard as a bank by handling the delivery and centralization of customer assets while those firms at the origination/creation and discovery/ aggregation positions smile. Interswitch is a big part of the center, but the Verve is at the edges especially if the credit era should begin …watch this my video
Lesson: seek and desire that your innovation will put you in the appropriate positions on the curve! Otherwise, you can be working for others!
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