Leatherback CEO, Ibrahim Ibitade, on operating in emerging markets and its global banking ambition

Three weeks ago, the African tech ecosystem was rocked by news of Mercury, a popular US neobank serving startups, terminating accounts for users in 15 African countries.

The withdrawal of Mercury's services is a severe setback for African startups. The bank was a crucial financial partner, enabling seamless cross-border transactions, efficient venture capital management, and the operation of US dollar accounts essential for attracting foreign investment.

Mercury's departure has created a void in the market, prompting a surge of local startups offering similar services, to position themselves as viable alternatives. One of such startups is Leatherback, a cross-border payments platform with over 30,000 customers operating across Canada, the UK, India, Pakistan, Nigeria, Ghana, and Ethiopia.

“With everything going on with African businesses and their Mercury accounts, it’s a dicey situation,” Ibrahim Ibitade, Leatherback CEO says over call.  “But we’re well-positioned to service Africans with our growing suite of products.”

Over a conversation, Ibitade talks about operating in emerging markets, the thesis behind Leatherback’s expansion and its global banking ambitions.

What’s it like operating in emerging markets and building a solution for people in this market?

Operating in emerging markets presents significant hurdles in nurturing innovation, with a primary challenge in the regulatory landscape. Many countries lack the specific licenses required to support the groundbreaking ideas that founders are developing.

Consider the rapid evolution of technology. Just a few years ago, we grappled with the complexities of web3. Today, it's AI. The future holds countless unknowns. The recent AI-induced strike by the actors guild in the US underscores the urgent need for regulation to protect various stakeholders as technology advances. 

Africa's regulatory landscape for financial technology is significantly underdeveloped. For example, only a handful of countries have issued electronic money licenses, a crucial requirement for payment solutions. Even non-financial firms often hold customer funds temporarily, as exemplified by ride-hailing platforms like Uber, which maintain digital wallets.

Despite the clear need for financial innovation, the regulatory environment remains restrictive. As a result, many successful African startups label themselves as US or UK-based to attract investment and operate freely. This highlights the urgent need for Africa to foster a conducive regulatory framework to nurture homegrown tech champions.

A misalignment between regulatory frameworks and the pace of innovation is a significant barrier to progress. As Dangote recently highlighted, the complex and inconsistent licensing requirements for operating across Africa create a nightmarish environment for businesses. No country around Nigeria has similar laws or regulations around doing business. Without a harmonised regulatory landscape, entrepreneurs face immense challenges in scaling their solutions across borders.

You need to consider all of this before setting up a business that solves problems for other companies.

How have you navigated around these regulatory hurdles?

Navigating the regulatory landscape across seven countries is incredibly complex. As an African-owned business, we face additional hurdles due to stereotypes and biases. For instance, securing a bank account to apply for a license can be a year-long ordeal, often hindered by the fact that we have Nigerian shareholders or that we process payments to other African countries. The perception of high-risk African payment corridors further complicates matters, despite our use of reputable banking partners. 

In some countries, you need to have compliance managers before you even start doing anything.  You can place people on salary for a year and at the end of the day, you can’t still get a bank account to apply for a license.

To overcome these challenges, we’ve prioritised solving real-world problems while investing heavily in compliance. We have the same banking partner that any of the biggest electronic money institutions in the world have. 

Let’s talk about your recent partnership with Yes Bank in India and your reason for expanding there.

Our strategic partnership in India has successfully enabled rapid money transfers between Nigeria and India, with people being able to transfer Rupee in under 30 minutes. This corridor presents a significant opportunity to facilitate seamless remittances from other West African countries like Ghana and Mali.

Given India's prominence in pharmaceuticals, hair products, and health tourism, we see immense potential for expanding our services to cater to the growing demand for cross-border transactions in these sectors.

Our goal is to capitalise on this momentum and become the preferred platform for Africans sending money to India.

Leatherback is also in Pakistan, why the expansion towards Asia?

Trade is a primary catalyst for our expansion strategy. Given Asia's dominance in global supply chains, it's a key region of interest. Think about it, where do we import from? Asia.

Additionally, migration patterns significantly influence remittance flows, creating opportunities for our services.

When you expand to these countries, how are you able to build trust with local stakeholders?

Regulation is crucial for building trust. Operating in a regulated market signals our commitment to customers and long-term presence. The UK's robust safeguarding laws, which mandate holding customer funds in segregated bank accounts, are a prime example of best practices.

Exceptional service delivery is equally important. Our ability to execute on promises, such as instant Naira-to-Rupee transfers, sets us apart in a market where this is often not possible. Additionally, we’re one of the few fintech startups operating in Ethiopia.

Africa's fragmented landscape presents significant challenges, but it also offers immense opportunities. By consistently delivering reliable and innovative solutions, we've positioned ourselves as a trusted brand with a strong foothold outside the continent.

With all these expansions, how has the Leatherback product suite evolved with the markets? 

We've evolved from a remittance service into a full-fledged global banking product. This strategic shift has driven our market growth. By offering local accounts in key markets, we've simplified the financial lives of our customers. Nigerians abroad, for instance, can now manage their finances seamlessly without the hassle of opening multiple accounts. They can even send money back home directly from their local account.