Entering a new market: analysis of Verifone in Nigeria Leveraging FinTech revolution to contribute to financial inclusion

In the context of globalization, multinational enterprises are embedded in ecosystems full of interdependent relationships. Companies are driven to invest across borders to compete globally (Bleeck, and Ernst, 1993). However, multinationals trying to enter new markets face the difficult problem of choosing the most efficient entry mode. The first goal of this paper is to explore the different methods to penetrate a foreign market. I have reviewed the various multinational strategic approaches and their internationalization processes. I have analysed two entry modes: Strategic Alliances and Mergers & Acquisitions and will discuss the pros and cons of each. I have also highlighted the relationships and dependencies between entry modes and distribution channels. In the second part of this paper, I have illustrated my theoretical exploration with the real business case of VeriFone, the company where I was interning in Global Strategy from January 2016 to July 2016. VeriFone, a multinational company headquartered in San Jose, California ((U.S.A.), in the middle of the Silicon Valley, provides payment Systems and Services. I have investigated the firm’s Services business entry into Nigeria. Nigeria is one of the emerging countries targeted by the World Bank for financial inclusion opportunities. In the world, there are 2 billion people financially excluded (World Bank, 2015). Fintech innovations, launched by many players in the industry, develop and contribute to financial inclusion of the population. For example, a fintech innovation called “Mobile Money” provides alternative access to financial services for unbanked and underbanked people through mobile phones. Roughly 47% of the Nigerian population are unbanked while 78% of the population own a mobile phone (Ericsson, 2015). “Access to financial services can serve as a bridge out of poverty. We have set a hugely ambitious goal – universal financial access by 2020 – and now we have evidence that we’re making major progress,” said World Bank Group President Jim Yong Kim. "This effort will require many partners – credit card companies, banks, microcredit institutions, the United Nations, foundations, and community leaders. But we can do it, and the payoff will be millions of people lifted out of poverty.”(WorldBank, 2015) The research question I seek to answer in this Business case is: What would be a judicious entry mode and distribution channel for VeriFone Services to enter the Nigerian market contributing to financial inclusion of the population? I applied a rigorous qualitative methodology which included a documentary research and interviews with three key people from VeriFone and the industry. The first part of my research is a macroeconomic analysis of the Nigerian market, which I will related to Mobile Money, an innovation which is contributing to financial inclusion of underbanked and unbanked people. This analysis and the interviews I conducted have provided me a good understanding of the current situation of VeriFone and its partners in Nigeria, and where VeriFone could contribute in the value chain. Finally, leveraging the theoretical concepts and conclusions of my literature review, I have made recommendations for VeriFone Services to enter Nigeria to contribute to financial inclusion.