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?
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.
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:
AI, machine learning and deep learning allow for sophisticated software programming, and the ability to build better ways of making sense of data.
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.
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:
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:
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.