Africa has been recognized as the one of the most promising market for fintech startups and products, with around 80 percent of the continent’s 330 million adults unbanked. The lack Africa’s financial resources and services has led to a surge in the growth of its fintech industry , triggering the emergence of major fintech and non-bank platforms that are gradually overtaking traditional bank services and mobile networks.
Some major players in the fintech market including MFS Africa and Nomanini demonstrate a clear spike in interest towards non-bank mobile and web-based payment platforms, with MFS Africa connecting nearly 80 million mobile wallets in Africa on a cross-border payment network that enables users to send cross-currency and cross-network transactions at ease.
Fintech startups in Africa developed and distributed payment networks which banks failed to integrate into their existing financial infrastructure. This drastically altered the trend in Africa’s financial industry, with investment and customers migrating from conventional banking services to innovative and new generation fintech products.
The preference of African users towards fintech and cross-border payment networks over traditional banking services have led to a significant growth in investment and funding from local investors and financial institutions. The risen capital for fintech firms and research institutions in the field secured financial technologies as a core part of Africa’s financial industry, creating a dangerous competition for banks to deal with.
Recently however, banks have shown little to no interest in competing with fintech firms. Instead, they recognize the level of innovation and disruption newly developed and designed fintech platforms bring. Thus, banks have begun to support and fund emerging fintech startups, with a long-term vision of creating a healthy financial industry and market for all countries and citizens in Africa.
According to a study, the total funding for fintech startups and products in 2015 reached an all time high record, as the fintech market secured 30% of all investment in the continent.
With banks’ recognition of the importance of fintech and its clear disruption in the continent of Africa, the fintech industry is expected to rapidly rebuild the African financial industry in the next coming years.