Africa, the youngest in the digital space has proven to be early adopters of technologies. Africa is financially evolving fast without the burden of migrating from old technologies and infrastructure, such as a fixed-line Internet. Africans move directly to the latest smartphones to use a wholly mobile Internet and as a result, South Africa and Kenya are among the fastest-growing smartphone markets in the world. Therefore, the need for fintech companies can’t be over emphasized.
What is FinTech?
Financial technology, also known as FinTech, is a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.
However, the lack of legacy means Africa is a greenfield opportunity for fintech. Entrenched issues continue to prevent the spread of traditional banking, quite in contrast to Western markets where fintech products and services compete with established trillion-dollar enterprises that benefit from consumer and merchant saturation and established digital payment habits. Eighty percent of Africans don’t have a bank account – let alone a credit card – but they have a phone, and for most that will soon be a smartphone.
When faced with a choice of cash, or nothing, digital access to your money presents an immediate benefit to consumers who otherwise ferry cashwages between home and banks on public transport over large distances. It is inefficient, costly and a security hazard. More problems arise with identity and reputation management, debt enforcement, credit scoring, access to financial products like insurance and even savings.
Most fintech companies do not focus on Africa, perceiving a lack of existing infrastructure to build a viable business case. But carriers already have the infrastructure up and running and are alive to extend those assets with shared upsides, reduced acquisition costs and improved user retention. They welcome the experience of fintech companies to help accelerate user adoption and bring connections to new merchants.
Africa has both the need and the desire for better financial technology solutions. The rapid adoption of mobile wallets is just one. Cash offers access without full utility in respect of logistics and the lack of online payment capability.
Fintech companies that focus on Africa will find a certain complexity but with virtually no competition. Solving Africa’s cash problem is an opportunity to help over a billion people leapfrog to the next wave of growth.
As a result, Africa is a virgin market to be exploited especially by FinTech companies. This digital age is compelling every African to adopt mobile wallets. In this regards, FinTech multinationals should seize and exploit this virgin market by Investing in FinTech #startups in Africa