It’s projected the financial services sector is among the largest in the world at about US$11 trillion in earnings. Accenture estimates that 35% of this is at risk of disruption from fintech startups.
Early this year, Interrupt Africa released African Technology Startups Capital Report which showed that fintech was the most popular destination for capital in the technology sector after solar in 2015.
The continent’s conventional banking has failed, around 80% of the population in the continent, with 330 million adults. That’s a huge gap that fintech startups could fill with revolutionary alternatives.
The increase of new and successful fintech startups in Africa can be linked to innovations that fulfill the requirements of the unbanked population. Fintech is easing economic growth in Africa by reducing fiscal inclusion. The anchor of a thriving market is strong financial sector together with fiscal inclusion.
Various remarkable fintech businesses can show the success of fintech in Africa. Such fintech firms are:
Zoona – A money transfer company running in Malawi and Zambia. To date, Zoona has pulled over 1.5-million customers and has processed more than $1 billion in transaction value across a network of over 1,500 agent factory outlets.
Rainfin – The largest P2P platform that focuses on SMEs in South Africa.
M Pesa – A mobile phone-based money transfer in Kenya.
Snapscan – A company that supplies a cashless, cardless payment program that users may use across South Africa at a large number of dealers that are distinct.
This week, Mastercard and South African mobile payments startup iKhokha announced a venture that plans to improve payment card acceptance at micro, small and medium enterprises, while educating consumers and business owners on the benefits of utilizing electronic payments rather than cash. Based on iKhokha’s study, low-income earners that are banked, typically take their monthly salary from an ATM, since there is quite small card acceptance, and take cash for the month. The research demonstrates there is a large market in electronic payments in the continent.
The financial technology increase is set to continue, and the requirement of the fintech market in Africa is very large, of which fintech entrepreneurs haven’t yet scratched the surface. More and more men and women in Africa need financial services of some form. The basic need to borrow, save, insure and transact will never vanish, although waves of disruption will surely happen. Thus, the demand will be there.
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