Who's Interested in Founding a Forex Startup?

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1

I’m new to this… so forgive me in advance if this sounds unusual.

I had this idea immediately I heard about CBN floating the Naira, and I’ll explain it below. If something like this exists already, feel free to point it out.

The standard way we’ve traditionally changed Forex into USD, GBP or EUR is either by going through the bank (if you’re looking for a cheap way to buy - legitimately) or finding your friendliest BDC operator, if you’re looking to sell.

Visa Or Mastercard owners are usually at the mercy of their banks for exchange rate when travelling abroad, and as we’ve found during the Forex cap crises, this is not always in your best interest.

Now that CBN has floated the currency, there’s a new opportunity. A Forex marketplace that offers the best spreads.

For people looking to convert forex to Naira.

  1. You offer a rate better than Nigerian banks.
  2. You can receive deposits in foreign accounts, foreign debit / credit cards or into Nigerian domiciliary accounts.
  3. You deposit the Naira into a local Nigerian account

For people looking to buy Forex.

  1. You provide less bureaucracy compared to banks.
  2. You can receive deposits from debit cards or bank transfers.
  3. You deposit the funds into Domiciliary, International or Prepaid MasterCard accounts.

As a user looking to buy goods abroad, all I need to do is get a good exchange rate from your service, transfer the funds to you, and you send it to my supplier.

Presently I need to buy it from a BDC operator (or from the bank), deposit into a dorm account, and have the bank transfer (for a fee).

As a Nigerian travelling abroad, I can get a better rate from your service, and use your prepaid Mastercard when travelling abroad (so no funny surprises when I receive alert while shopping at Primark or Macys).

As a Nigerian in diaspora, I only need to use my foreign debit card to make a transaction on your app / website… and the funds will be deposited into my Nigerian account, or sent to someone’s account.

I believe this will help transform how Nigerians work with Forex, and the CBN announcement presents a unique opportunity.

Who’s interested?

2

The startup Idea process these days

  • Think of any thing
    • Add p2p
      • :bulb: Voila!!!
1 Like
3

Quick one, OP. How is this different from a service like say TransferWise? I know they are not in Nigeria yet but I was wondering if the aim is to avoid fees presented by traditional bank wires, plus the added convenience.

4

Even though the CBN has floated the Naira, they haven’t actually made the sale of forex a free-for-all affair (the BDCs are currently sitting on the bench).
An excerpt from this article:

To implement the new policy, the governor said the central bank would on Friday appoint primary and secondary dealers adding that their dealership level would be categorised based on the volume of transaction such an institution can handle.
He said based on the assessment of the CBN, the number of primary dealers would be between eight and ten financial institutions with a minimum transaction volume of $10m.
He said, 'We’ve decided that the CBN will deal primarily with what we call the foreign exchange primary dealers. We will have non primary dealers and primary dealers.
The guidelines for the qualification for being a foreign exchange primary dealer would be on our website.

You should check to make sure your idea does not run afoul of regulations.

5

There’s a reason why it works so well in several verticals.

6

Services such as Transferwise are mainly focused on Forex transfers from one currency to another. If you were not looking to transfer funds to another country, then Transferwise isn’t the best bet for you. As Nigerians trading or doing business abroad, we do not always get the best rates.

7

Aha! This prompted me to go check if worldremit has repented from CBN’s rate.

IMG_20160620_124812_623.JPG493×522 29.5 KB

They’re now exchanging at USD 1 = NGN316

8

This helps you get funds in.

What about those trading or travelling abroad that want to get funds out?

9

Ummm, Yeah, I know.

What you’re talking about is quite tricky though. If the forex supply is going to mostly be from people abroad that are coming into Nigeria, then they won’t sell their currency for any less than what the BDCs at the airport will offer. Same applies if they’re trying to send money to Nigeria.

I think your idea is actually late. If CBN achieves what it hopes to, the margins will be too slim and I doubt you can find a good enough selling point.

This would’ve worked best when Nigerians abroad were mostly sending money (WU & MoneyGram) to people here at CBN rate whereas the recipients could’ve gotten more at the black market. During that time, those abroad would be willing to sell/send dollar at a much lower rate than black market but higher than CBN’s and buyers will jump at it even if it is less convenient.

I don’t see how your idea would be a better option if CBN manages to return things back to the way they were. Albeit at a new exchange rate.

Maybe I’m missing something.

10

I have something like that here: www.paykobo.com holla at me: damola@damola.com if you are keen on this.

11

The first part is 100% correct but the second is not. I’ve found that people might accept a slightly lower rate if they’re sending money in for convenience, reliability and safety. But if you’re physically coming into the country, better hold cash and change at the airport

12

That may have been right. But how does the CBN regulation affect the viability of the BDC industry?

13

BDCs have always been in place before the exchange rate drama, and will continue to be.

14

I’m interesting in hearing from people who usually transfer Forex abroad to buy goods or services.

How do you currently get the best rates?

15

It depends on the scenario. I’m saying if and when (hopefully) things are back to the way they were, then people would rather use WU, MoneyGram or WorldRemit (Which is super convenient) to send money. When the entire forex market is trading within a slim margin, this idea would be reduced to an online BDC. It would now require superior tech to become more convenient than available options as opposed to using “better” rates as the main selling point.

16

@Yinka - that’s where the opportunity lies.

When banks are grappling with an open market, they’d have to maintain a certain spread in order to remain profitable. In the UK and US, you never get the best rates from the banks or high street shops. In Nigeria, you always get better rates from BDC operators.

An online BDC that embeds convenience and simplicity at it’s core… with features such as foreign transfers and prepaid cards will be a strong contender. People will choose to use it because it’s more convenient, easier to use, and offers better rates.

17

Transferwise delivers one way to Nigeria but temporarily stopped guess due to our unstable currency.

But in general this is not different from what azimo is doing with no charge especially to Nigeria. Or other competitors like small world and the rest.

18

I expect abokifx.com to take on your idea soon enough, it’s pretty worthwhile