Fintech in Africa: Moving to a Cashless Society
Africa is a world leader in mobile payments, and is home to many other innovative FinTech applications.
The establishment of AlphaCode in South Africa – an organisation that brings together a variety of FinTech founders and companies – is also an encouraging sign that we’re moving towards a virtual, cashless society on our side of the continent.
But with more and more FinTech applications being released, what does the African FinTech landscape actually look like?
FinTech in an African context
Major FinTech centres in Africa are South Africa, Kenya, Rwanda, Nigeria, Ghana and Côte d’Ivoire – where Standard Chartered Bank has just invested in a new digital bank.
In many of these countries, societal and transactional complexity has necessitated alternative methods for financial transactions, to better meet the average consumer’s financial needs. With 147% mobile connectivity in Southern Africa, 89% in West Africa and 61% in East Africa, the focus is on mobile financial solutions, predominantly centred around the ability to send money and buy products like insurance without a traditional bank account.
Technologies influencing FinTech in Africa
Here are just a handful of examples of the different technologies being applied to FinTech solutions in Africa, to support a society where banknotes and coins are no longer the main form of financial exchange:
1. Artificial Intelligence and Machine Learning
Described as “the simulation of intelligent behaviour in computers”, AI is relevant in developing FinTech applications because it provides a variety of use cases, from detecting fraud in hundreds of transactions to identifying behavioural trends in massive data sets.
Chatbots are another way of using AI to create personalised experiences that can respond to customers at any time of day, and guide consumers to make better use of financial applications.
2. Mobile Banking
Launched in Kenya in 2007, M-PESA created an innovative way to facilitate transactions in an economy where people don’t always have the necessary documentation to set up a bank account, but often own more than one mobile phone.
Today, M-PESA has evolved to become a key player in the mobile payments industry through the Safaricom network, with similar applications in place in other African countries, such as T-kash, Airtel Money, MTN Mobile Money, Orange Money, Ecocash and Tigo Money.
To get some perspective on the growing scale of mobile banking, recent statistics show that sub-Saharan Africa has 57.6% of the world’s 174 million active registered mobile money accounts.
One of the most talked about topics of last year, blockchain and cryptocurrencies are becoming a more established part of the FinTech market.
As blockchain continues to provide a way for innovative applications to focus on the issue of trust in exchanging value, these local FinTech applications in South Africa are leveraging blockchain technology to provide more efficient payments:
- Centbee: A bitcoin wallet that also facilitates merchant payments and bitcoin purchases
- Bitsure: Instead of adding additional layers to existing technology, Bitsure provides a financial services platform that “bypasses traditional rails”
- Bankymoon: With so many potential use cases for blockchain, Bankymoon provides consulting on which solution will work best for a particular business
4. Mobile apps
Besides innovative ways to send money, banks like FNB have also developed ways to make banking easier on mobile phones though user-friendly mobile applications.
In addition to these, banks are also supporting the creation of apps that make buying things and transferring money simple and easy, without hard cash:
- Karri: Handling cash at a school for events and outings is a big challenge for teachers, but Karri provides an application that allows parents to transfer small amounts of money directly to the school’s treasury
- Slide: With an easy to navigate interface, Slide enables easy payment transfers through any South African bank
- Snapscan: By linking to your mobile phone, paying for something is as easy as scanning a QR code
- Waxd: With the use of a single Application Programming Interface (API), Waxd facilitates easier EFT payments
- Yoco: Yoco gives entrepreneurs a more affordable way to accept card payments through its pocked-sized card reader and mobile Point of Sale (POS) application, which also accepts virtual payments
As virtual and cashless applications continue to be released within the African market, security risks associated with the carrying of cash are eliminated as well as the headaches of those without traditional bank accounts. As Africa moves towards a virtual, cashless society, this empowers people to take charge of their finances.
At SovTech we build software to facilitate quicker and more efficient transactions, across all industries. START A PROJECT or HIRE A DEV TEAM to connect with us and find out how our rock-star team can help you build FinTech products that will play a part in further advancing a virtual and cashless society.
Check out one of our latest products, PROJECT UBU (Universal Basic Unit); a cryptocurrency that unlocks currently dormant, inefficiently allocated and unrealised resources to create commercial and social value.
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